No. of Recommendations: 15
Oracle is down about 55% year over year. They need a New Mexico natural gas pipeline they can't get approved and are trying to get our of rent payments to Blue Owl, the site developer, for rent for datacenters they can't lease. The stock price is going to be pressured by delays in converting the datacenter backlog into revenue, and cash flow is substantially negative. They have laid off 15% of their employees, largely in Engineering, and I doubt it is sustainable. Ellison the Elder is using his own shares to guarantee Oracle loans, from what I understand.
Larry Ellison is putting up his own shares as collateral for Ellison the Younger's Paramount-Skydance merger, too. Almost $100B between both, in Falling Knife candidate ORCL shares.
They've taking Middle East sovereign wealth fund money, and they are looking to other source
variety.com - David ellison considering elon musk paramount investment. It doesn't look particularly strong. Recent developments in the Middle East suggest that funding source will be diminished.
They have about 1 month left before the US elections. I am not inclined to care about Kalshi but they have a 60% plus odds of a Democratic sweep of both houses of Congress. The Ellisons have famously allied themselves with the president.
I think there's a real chance Ellison could get seriously wiped out. He had to cancel a planned 50M share ORCL stock sale. I wonder how close that stock is to a debt spiral when his loan ratios result in margin calls. Presumably the banks loaning him the money for these datacenters and an increasing icky media merger are not going to hold ORCL shares. Lower price, more margin calls collateralized by ORCL, more sales, ad nihilum. I doubt interest rates are going to cooperate.
He's done the buy-borrow-die strategy. So I wonder how liquid he is, or how the market is in Hawaiian islands, megayachts, and billionaire homes. If he had to sell stock, I wonder what his tax liabilty would be. The force majeure looks panicky. Hitting up Musk looks panicky.