If Zhang Juzheng is the epitome of being adept at statecraft but clumsy at personal affairs, then Musk is the embodiment of Lü Buwei, finding more success in political venture capital than in business.
Written by: Zuo Ye
Big boy turns into a little girl, the awakened Musk angrily turns to the Republican Party, today I realize I am me. After finishing Elden Ring, on October 28, 2022, Musk purchased Twitter for $44 billion.
People are unclear about Musk's true feelings at the time. The binding between Silicon Valley and the Democratic Party has exceeded 30 years. Even if some are dissatisfied with the Democratic Party, they mostly engage in balanced policies, donating to both parties. A businessman like Musk, who is all in for Trump, is indeed too unconventional.
But at least, his longtime friend Peter Thiel can understand all of this. Peter Thiel is Vance's benefactor, while Musk's gamble is on Trump. One is bright, the other dark; one is positive, the other negative. Rather than saying that this election represents a victory for Trumpism, it's more accurate to say that it is a comeback for Musk and Peter Thiel.
Ultimately, Musk is a businessman who hopes that the costs he incurs can generate more profit, especially since betting on politics directly results in periodic liquidations. If he wins this election, what will happen four years later, or eight years later? Only by becoming a true controller can he stand undefeated. Musk's strategy is also very simple: to become the spokesperson for the entire American high-tech industry, to become the new benefactor of millions of workers, thus naturally weathering political fluctuations.
This article aims to roughly estimate how much Musk has invested in this election and what the direct and expected returns might be.
"How many times the benefit of farming?" He said: "Ten times." "How many times the profit of pearls and jewels?" He said: "A hundred times." "How many times the gain of being the head of state?" He said: "Countless."
Twitter was acquired for $44 billion, but it wasn't as if he took cash to buy it; rather, he used Tesla stock as collateral for loans, with Sequoia providing $800 million.
America PAC, PAC stands for Political Action Committee, allowing Musk to exceed the limits of individual small donations and some other contributions. Musk's personal donations range between $110 million and $177 million.
The above are the two largest expenditures, with direct donations around $100 million. However, the purchase of Twitter is clearly intended to assist Trump's political campaign and is thus counted in.
Next is Musk's potential profits. First, there's the exciting rise in Tesla stock, with his personal wealth surging by 10% in a single day. Musk holds 20.5% of Tesla shares, and before acquiring Twitter, he likely held about 22%. After acquiring Twitter, he went through a selling period, which the market generally considers to be Musk's personal debt.
Let's do some math: of the $44 billion used to acquire Twitter, $13 billion belongs to Twitter's debts, while Musk sold stocks worth approximately $23.08 billion at market price before and after the acquisition. Considering that Musk's acquisition of Twitter is purely political speculation, $23.08 + $1.77 = $23.257 billion is his true investment cost for this election, as Twitter's commercial value is significantly lower compared to social products like Facebook, Instagram, and WhatsApp.
Calculating at a cost price of $23.257 billion, it is clear that Musk's return cannot be calculated as (2900-2620)/1.77=158 times over 5 days. If such a good business existed, the entire financial market's speculators would go crazy. Musk's actual profit should be (2900-2620)-23.257= $4.743 billion, which is much more reasonable.
Of course, no matter how we calculate, it's just for fun. However, interestingly, Musk's additional profits mainly stem from Bitcoin, Dogecoin, and future expected government contracts, which may be the big portion compared to short-term investment returns.
The wisdom of humanity is contained in two words: hope and waiting.
Musk has been preparing for the Republican - Trump victory for two years, but has been pulling orders for SpaceX for over 10 years, primarily government orders. This is similar to how Tesla initially survived by selling carbon credits. When a business grows to a certain extent, it is impossible not to engage with the government and enterprises. Let's consider these factors and see how much Musk might theoretically earn after this election.
Image description: Elon Musk's personal timeline, image source: https://www.officetimeline.com/blog/elon-musk-timeline
First, Musk holds Bitcoin through Tesla, currently retaining 11,509 Bitcoins. This is the remaining portion of the 43,200 Bitcoins purchased for $1.5 billion in 2021, with an average purchase price of around $35,000. Although Tesla has sold some portions and experienced both losses and gains in the meantime, this portion of Bitcoin is now valued at $860 million. Given the price fluctuations and considering Musk's wealth, we can tentatively count it as an expected profit of $1 billion.
Secondly, there are the earnings from Dogecoin, which are indeed hard to calculate. Although Musk himself is likely to hold Dogecoin, it cannot be confirmed. It can only be counted as part of Musk's concept stocks/coins, which is really indeterminate.
Finally, regarding government orders, contrary to common perceptions, the proportion of U.S. government fiscal spending relative to GDP has remained stable at around 40-50% for many years. Government orders are crucial for various large companies, especially high-tech enterprises. For instance, Amazon's CEO Bezos, who announced neutrality, lost out on a $10 billion government cloud service contract to Microsoft Azure because he offended Trump. To add, although Gates donated $75 million to Harris, Microsoft has also donated significantly to the Republican Party and has cut its DEI (Diversity, Equity, and Inclusion) department, demonstrating flexible political positioning.
Currently, Musk's companies include SpaceX, Twitter (X), Tesla, The Boring Company, Neuralink, and xAI. The main products eligible for government contracts are rocket launches and Starlink communication services. For example, by the end of Trump's first term in 2020, Musk had received around $8 billion in government rocket launch contracts, primarily from NASA and the Air Force.
Currently, with Boeing's struggles (two astronauts are still in space), and Bezos's Blue Origin progressing too slowly, rocket launch contracts will significantly increase during Trump's second term. In June this year, NASA awarded SpaceX a contract worth $843 million.
Moreover, the U.S. government will also strengthen support for next-generation communication networks, and Starlink has already obtained a $70 million contract from the U.S. Space Force. These services will further increase with Trump's administration.
Conclusion
If Zhang Juzheng is the epitome of being adept at statecraft but clumsy at personal affairs, then Musk is the embodiment of Lü Buwei, finding more success in political venture capital than in business. With $23 billion and a two-year layout, just the Tesla stock price alone recouped the costs within five days, yielding nearly $5 billion in profit.
From a long-term perspective, government contracts and subsidies over the four-year period will become more tangible as D.O.G.E. continues to materialize. Although the big brother has declared a reduction of $2 trillion in government spending, it certainly does not include his own government contracts.
