- Selling stock in Tesla will be necessary for Musk to purchase Twitter
- Twitter's board just signed off on Musk buying Twitter
- Musk just announced laying off Tesla employees
that's to say nothing of the "kid being trans" stuff, which I'm not comfortable about how that's been covered in the least
but since the instigation of this move to buy twitter seems to be about Musk developing a defensive posture around transphobia...
🇳🇱
@cwebber I think I missed something... how does Musk buying twitter relate to transphobia. Also not sure of the relevance of Tesla layoffs in general here, one person selling stock to another doesnt generally effect a companies operating budget, at least not directly.
@cwebber Thanks. Had no idea he was posting anything transphobic, I'd have to see that part to form an opinion.
That said im generally ok with the free speech part, where I have issues is when a person cant filter the speech they hear effectively. Generally trying to control speech seems to just amplify hate speech anyway.
Not sure I see any tie in to the employees laid off though still.
@freemo In order to complete the sale, he has to perform a sizable sale of the stock he has in Tesla. It could be disconnected, but the announcement came within hours of *also* Twitter's board signing off on the sale.
@cwebber Its likely a coincidence. The selling of a companies stock from one stock holder to another has no effect on a companies operating funds. It can change the valuation of a company, but not the ability of that company to pay employees.
This is an easy confusion to make as the sale of stock can under other circumstances generate funds for internal use. This happens only when a company sells stock the company itself owns, or creates new stock (increases number of shares) and then sells that. Since in that case the company is selling the stock it generates money for the company. Also the reverse is true, if a company performs a stock buy back then it would loose operating funds.
But yea, Elon selling his shares has no direct impact on how much money tesla has in the bank.
Its a bit more complicated than that. Yes laying off people does increase short term money flow but long term it may reduce or increase money flow depending on if the decision was made wisely or not. You need people to develop your products and the rate and quality of the products you produce determine your long term income. So layoffs can easily cause long term income to go down, and often does.
If the hiring and firing in a company is done right it is based on one thing, whether doing so will be in the best interest of the company's future or not.
@freemo I know it's not that simple, otherwise firing all workers would be a winning strategy. :D My point was that the stock market reacts to layoffs with stock rises, presumably based on something like the reasoning I described above. I only know about the reasoning because someone tried explaining to me why companies do that and why it apparently works.
Probably if they were too obvious about the attempt it would fail, but I'm not sure -- the short term gains might be enough for a short term change in stock price, which is all you want when you want to sell a lot of stocks.
@timorl @freemo It did result in a stock rise, fwiw https://www.forbes.com/sites/mattdurot/2022/06/21/why-elon-musk-is-nearly-15-billion-richer-tuesday/?sh=2d5db14b2816
Infusion of cash just in time to complete the purchase he can't wiggle out of.
There was a stock increase, that isnt the same as saying the layoffs are the **cause** of the stock increase. In general the stock would increase if the decision made is best for the company in the opinion of the public. If the public thinks a recession is going to happen then a layoff will likely increaase the stock, otherwise it will likely decrease it.
So if anything this probably isnt showing so much that a stock increase will generally follow layoff but rather that whenn a recession is looming a layoff is going to have the best impact on share price, but otherwise may be detrimental.
@freemo @timorl There's a missing piece in your analysis:
> In general the stock would increase if the decision made is best for the company in the opinion of the public.
That's true often, but not always. "Best for the company" must be defined. In general, shareholders operate off of what is believed to be *best for the shareholders*, and more importantly, *within the time period those particular shareholders are holding shares*.
"Best for the company" can be a more general thing, including "well being of employees", "stated objectives of the company", and "longevity of the company", all of which sometimes do align with the above, but not always. So, we should be more clear: shareholders are operating that way mostly because they believe it will be to their shareholder benefit, with to a smaller degree, also incorporating some of the other metrics of company well-being.
@freemo Huh, I would have thought this was referring to a different mechanism -- laying off people is one of the easiest ways of lowering operational costs, which results in the company valuation growing, which results in stocks' price growing. So the relation I would expect would be reverse to what you are describing -- not "I have to lay off people, because I won't be able to afford paying them after selling the stocks" (which I agree makes no sense), but "if I lay off people now, the stocks' price will grow, so I won't have to sell as much stock to afford Twitter".
Obviously rather than "grow" I would expect "fall less", since announcing that you'll have to sell lots of stock will most likely impact the price much more.
@cwebber