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Musk and Moats-A Brief Update

musk and moats

You may have seen my article earlier this week about the war of words between Warren Buffett and Elon Musk over disparate business philosophies. In that article I alluded to the fact that Musk’s investments have “bled cash to the extent that he has experienced multi-billion-dollar negative cash flows over a five-year period.”

Well, last week CNBC announced that George Soros’ investment firm, Soros Fund Management, bought $35 million worth of Tesla convertible notes in the first quarter of 2018. Last year, Tesla raised $1.8 billion in its first high-yield “junk” bond offering. This was $300 million more than was expected.

Now, in the grand scheme of things, $35 million may not seem like a lot of money, but it does indicated that Soros is bullish on Musk and Tesla. And Tesla seems to be in good company. Soros also loaded up on Amazon, Alphabet (Google) and Netflix stock, while dumping Facebook and Twitter.

In the spirit of technological disruption, all of these companies have successfully disrupted their respective spaces, although Facebook, and social networking sites in general, have faced challenges recently, for reasons that have been well-covered by the press.

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mike cobb