There's nothing new about this business model. It's just shocking that anyone thinks this will produce better results.
At current 4.50% borrowing costs ... I guess it might not be entirely stupid to just pile on investments instead of paying off the debt, especially if your plan is to keep the inflation well above 4.50%.
Now, what exactly would be the composition of such an "investment" is another story, and I'm afraid it's not going to be entirely objective and fair.
The pension/insurance funds themselves may have debt for their own corporation, not sure - but the capital "surplus" they invest isn't their own money, rather, more or less directly, their clients' money.
There must be some people that choose between repaying debt and investing surplus in 3rd party investments, but surely a minority. Much smaller still for VC which is crazy illiquid.
Except for small, unusual elements, that's all "deep state". Definitely any parts that have any real, deep expertise would get sidelined as obstructionist fossils or whatever. They're already purging the military officer corps to put in loyalists who will do the things MAGA wants without asking too many questions. And I'm sure they're purging intelligence to put in people who not only do what they're told, but say what the boss wants to hear.
The connections you'd need to have would be with Trump cronies and only with Trump cronies. I'm sure they have some Grand Vision(TM) to offer for where the money should end up.
The grift begins.
And at a depreciation rate of 15-20%, that "D" term starts to get pretty expensive, pretty darn quick.
There are thousands of companies misusing EBITDA. Pick an example of a public company with open books doing so. Picking a private company with closed books is just weird.
Where did you get that data from? As I recall reading they’re meant to last a lot longer but if left alone would fall and burn up within 5 years. Is that what you’re talking about?
https://web-cdn.bsky.app/profile/planet4589.bsky.social/post...
They may be _meant_ to last a lot longer, but as you launch a larger constellation, you end up finding more and more edge cases which your original design missed. Even if it's a generous 10yr lifespan - 10% depreciation is pretty brutal, especially if your customers are expecting a certain coverage quality, as then you need more redundant satellites in orbit.
In a more typical accounting system, You would divide the cost of replacement by the lifespan and get that the satellite "costs" 20 million per year, but only earns 1 million the first year, leading to a net loss of 19 million.
With EBITDA, you treat the satellite as a fixed up front cost and then year 1 comes and you made a million dollars! You're in the green! Year 2, you made 1.1 million! Up and to the right we go!
This works great until year 6 when the satellite needs replacement. But with fancy accounting magic, you put the capital costs to replace into a different bucket and can claim that your satellites are money printing machines!
Basically, it is a profit like number that tells you something about the core business, but it isn’t just the straight up raw profit number of having more cash than previously when all said and done. The person you’re responding to was claiming that they used this EBITDA number to claim they were profitable, when they really were not since presumably, once you account for those costs that are excluded from EBITDA, they may have not been profitable.
