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Comment by 55555 | Hacker News Reader

Are you calling SpaceX a PE firm or am I missing something?

https://en.wikipedia.org/wiki/Falcon_9

Maybe I understand the term wrong, but I was under the impression that PE means "not publicly traded, in private hands". Which is what SpaceX is.

Thete's a big difference between a private firm and a private equity firm.

Private firm - no public trading of stocks.

Private equity - a business model created by syndicates that borrow money to buy companies, saddle the companies with that borrowing, demand a quick return (-> layoffs, selloffs, and wage cuts), then bankrupt the company when all the value and productivity have been extracted.

Crucially the money which is never repaid is not borne by the banks that put that money up front, they chop it up and sell it off with other things so nobody even knows who loses the money.

It's the sub prime mortgage thing all over again

To demonstrate that I'm not an economist: PE is a more specific than just private company. Boeing sold its Wichita division to an "investment firm". An investment firm is essentially a company that buys and sells companies. Typically they're focused on short-term profits to juice the stock price before it's sold.

Spirit was created and sold to the investment firm (Onex) in 2006, and Onex turned around and sold its the last of its stake in Spirit in 2014. Onex got over $3 billion for their initial $375 million stake in Spirit. The cost, as we're rediscovering, is that quality of Spirit's product went to shit and the long-term viability of Spirit is in question.

If it was so bad why did people pay so much more for Spirit stock in 2014?

> If it was so bad why did people pay so much more for Spirit stock in 2014?

Fact that it sold for more doesn't mean it was in good shape. There are many potential reasons why people would pay more, even if Spirit was in bad shape.

https://en.m.wikipedia.org/wiki/Private_equity_firm

It is somewhat depressing that when you accidentally make a comment that attracts a lot of downvotes, you can't even delete it and have to watch them rolling.

The truth is that by a literal definition of the words private equity, SpaceX does qualify. All private companies are equity that is private. But when people use the _phrase_ private equity, they're referring to people who are specifically starting with a pot of money and then shopping around for companies they think they can flip for a profit, often with the normal trappings of private equity, for example, `carry` and particular tax and business strategies (debt, etc). So because SpaceX was started by a founder with an actual mission and grown from zero, and because their goal is primarily to build rockets and not make a quick buck, most would simply call it a 'private company' to avoid confusion.

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