They’re the ones who pay when Amazon backs down

May 2, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on May 2nd, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Amazon beat market expectations, but the only word anyone wanted to talk about was “tariffs.” E-commerce has become high politics — and millions of small businesses are now being squeezed between Jeff Bezos and Donald Trump.

Amazon’s founder Jeff Bezos may have thought he would be able to live a somewhat quieter life after stepping down as CEO of his mega-company. The multi-billionaire found himself a new fiancée and recently launched her and a number of other celebrities into space on a rocket from his own space company, Blue Origin.

You know — the sort of things billionaires entertain themselves with.

Things have not been particularly quiet, however. Trump’s trade tariffs have placed the otherwise neutral and politically innocuous world of e-commerce squarely in the spotlight. When it was reported that Amazon was planning to display for customers exactly how much of a product’s price consisted of tariffs, a minor political crisis erupted. And Donald Trump did not call Amazon’s CEO Andy Jassy — he called Bezos directly. Shortly afterwards came a very brief message — just 31 words — from Amazon explaining that the company had never approved this change.

When Amazon gathered its analyst community late on Thursday evening, Swedish time, the intention was to keep the focus on the first quarter of the year. Trump’s “Liberation Day,” when the tariffs were introduced, was 2 April — two days after that quarter ended. But in a turbulent global environment, the sales figures from earlier in the year felt distant. The company was expected to report its lowest revenue growth since 2022 — and that was even before the tariffs had been introduced.

Under normal circumstances, Amazon would have delivered a solid quarterly report. Both revenue and profit came in above analyst expectations. CEO Andy Jassy said he was “optimistic” that the company could emerge from the tariff crisis stronger than before it. But what else would he say? CFO Brian Olsavsky did, however, acknowledge that the situation was creating uncertainty.

And that was what the market saw too. The share fell around 3 percent in after-hours trading, and is down a total of around 13 percent since the start of the year.

The tariffs pose a unique challenge for Amazon. For even if the company were to try to shift towards more American suppliers, a large portion of the goods on its platform are not ones it controls itself. Around a quarter of Amazon’s revenues — and over 60 percent of the number of items — come from other traders who use Amazon’s platform purely as a sales channel. To the customer it looks essentially identical — they shop on the website and receive packages. But it is a separate company doing the selling, and it pays fees to Amazon for the privilege.

These businesses range from private individuals to multimillion-dollar companies built up using Amazon’s infrastructure. In total there are around two million different businesses actively selling on the platform, of which roughly 1.1 million are based in the United States alone. Collectively they are large, but they do not act as a unified group and therefore lack negotiating power. Finding new suppliers to circumvent tariffs is therefore an extraordinarily difficult and time-consuming task given the scale of the problem — especially since many of these sellers do not do this full-time, but run their Amazon operation as a side business.

The prospect of millions of sellers all replacing Chinese and other Asian suppliers with American alternatives is therefore a near-impossible task — at least in the near term. Especially since up to 70 percent of all goods on Amazon come from China. The risk is therefore more that sellers choose to close their businesses entirely. That would hurt Amazon’s revenues significantly — but it would above all affect individual American entrepreneurs whose livelihoods could be destroyed.

The so-called “adjustment” brought about by the tariffs — as the American government has described it — is something Amazon will be able to manage. It is one of the world’s largest companies with a broad portfolio of revenue streams, much of which has nothing to do with e-commerce at all. It is, for example, one of the world’s largest providers of cloud services. But the individual sellers on its platform are not necessarily as resilient. If the tariffs cause them to scale back — or shut down — it could be a severe blow both to Amazon and to American commerce as a whole.

Google’s dominance could soon be over

April 25, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 25th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Google beat expectations for the start of the year, but the big risks lie further ahead. Having lost three court cases in succession, many are now wondering whether we are approaching the end of Google as we know it.

As an investor, it is easy to love Google. The advertising on its search engine has been the perfect product — predictable, growing, and extremely profitable. If you use the internet, it is almost impossible to avoid the ads.

But for the first time in a long while, there are serious storm clouds gathering. In less than three years, ChatGPT has accumulated 160 million daily users — four times more than Google’s equivalent product, Gemini. OpenAI, the company behind ChatGPT, is shaping up to be a genuine challenger to the dominant search engine. And a threat to the advertising revenue — for the first time in over twenty years.

On top of that, the court cases have started piling up. After three consecutive defeats, Google has been found to be running illegal monopolies in various segments of its business. The otherwise rock-solid foundation of the world’s fifth-largest company has begun to show cracks.

It was therefore something of an uphill situation when Sundar Pichai, CEO of Google’s parent company Alphabet, came to present the quarterly results. Not because the numbers were bad — on the contrary, they beat expectations — but because many had their attention fixed on the future rather than on the quarter just passed.

Pichai presented a healthy company that exceeded analyst estimates on both revenue and profit. And it was precisely the search advertising that drove the strong results. The company is under pressure — but for now, users are still searching and clicking freely. The share price jumped in after-hours trading but has lost considerable ground since the start of the year.

The aforementioned court cases hovered in the background throughout the presentation. The most recent ruling came just before Easter. Google has said it will appeal, meaning it will likely take several years before everything is fully resolved. But as an indication of what the future may hold, it is concerning.

The cases covered, for example, the search engine itself and the agreement with Apple that made Google the default on all iPhones. The most recent ruling concerned advertising technology — the very core of Google’s revenues. If this is being established as unlawful in its home market, what might similar processes look like in an increasingly tech-sceptical EU?

Google’s monopoly-like position has, until now, been seen as a positive by investors — an almost impregnable fortress where giants like Microsoft, for all its billions spent on its Bing search engine, could not even make a dent. The problem lies in what the consequences of the rulings could eventually be. For even if it is unusual to go to such lengths, there is a good deal to suggest that Google could end up being broken up.

Looking back a considerable distance in time, to 1911, the American Supreme Court determined that Standard Oil had become too powerful and was distorting competition in the oil market. A total of 34 new companies were created from Standard Oil, two of which eventually became the now well-known Chevron and ExxonMobil. The purpose of breaking up the company was to increase competition in the market.

That sounds almost self-evident. But on the internet, monolithic companies like Google, Facebook, and Amazon have been allowed to operate largely unimpeded since the early 2000s. Microsoft faced a similar process over its web browser Internet Explorer, but managed to reach a settlement in 2001 that kept the company intact. The concessions Microsoft made, however, benefited Google directly. Its browser Chrome was given a fair chance — and broke through in a very big way.

Now the situation is reversed. In court, OpenAI, the company behind ChatGPT, testifies that it would happily buy Chrome from Google if that were possible. The search engine DuckDuckGo testified that the value of Google’s browser could be as much as 50 billion dollars. Consider what would happen if every search made through Chrome today led to ChatGPT instead of Google. The global search market would change overnight.

For the rest of the world, tariffs and trade barriers are the dominant concern right now. And that will affect Google too — not least as companies like Shein and Temu scale back their advertising spending. But for Sundar Pichai, the tariffs turned out to be a relatively minor matter to contend with. For now, the advertising revenue keeps rolling in — predictably and profitably, as it always has. But if Google is forced to sell parts of its business, investors’ favourite could soon become a very different type of company. Whether it wants that or not.

Mark Zuckerberg’s future is on the line

April 14, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 14th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Meta’s Mark Zuckerberg is being taken to court as his company’s future hangs in the balance. If he loses, the company could face a forced sale worth billions.

On Monday, the trial begins that could change social media forever.

The American competition authority FTC is accusing Meta — Facebook’s parent company — of running a monopoly. The case centres in particular on the acquisitions of Instagram and WhatsApp, and what the real motives behind them were. If the FTC prevails, Meta could be forced to break itself up — and initiate a forced sale of certain parts of the business. The social media market would then change enormously.

Meta contends that it has competed hard but fairly through its acquisitions, and points to the fact that the market has changed significantly since the purchases took place. Instagram was acquired in 2012, when it was a small but promising photo app. WhatsApp was acquired in 2014. Since then, TikTok has become a strong competitor, as have YouTube and Snap.

The trial is the result of an investigation that has been under way for almost six years. Right up until the last moment Meta tried to avoid the courtroom — including through direct lobbying of President Donald Trump. Those efforts were unsuccessful, and now Zuckerberg and a number of other executives are being called to testify in a process expected to last between six and eight weeks.

The central question the FTC is pursuing is hypothetical: would Meta be as dominant today if it had not bought Instagram and WhatsApp? The FTC argues the answer is no, but the challenge for them lies in proving it. To do so they are drawing, among other things, on internal emails that emerged during the investigation. In 2008, Meta CEO Mark Zuckerberg wrote that “it is better to buy than to compete.” In 2013, a senior technology executive at the company wrote that “personally I think companies like WhatsApp are the biggest threat to Facebook.”

The approach has been called “buy or bury.” In short, it meant that Facebook allowed competitors to use parts of its platform to gain more users or features. But if a competitor became too successful — to the point of posing a potential threat to Facebook — access to the platform was cut off. The choice for competitors therefore felt like being acquired by Facebook (“buy”) or losing momentum and potentially being shut out (“bury”).

The trial comes at a turning point in American politics where the overlap with technology has never been greater. Elon Musk is cleaning up public finances while simultaneously selling electric cars and launching rockets, and the list of tech CEOs who appeared on stage at Trump’s inauguration was long. For its part, Meta has recently changed its content moderation approach to something more suited to Trump, and has just appointed Dina Powell McCormick — a former Trump adviser — to its board.

Given all this, one might imagine that the government agency FTC would be more sympathetic towards tech giant Meta’s strategy and methods. But the investigation began during Trump’s first presidential term, when he had a considerably more sceptical attitude towards “Big Tech” and Meta in particular. More than anything else, however, the new FTC chief, Andrew Ferguson, has a different view of how fair competition in business should be achieved.

In an interview with Bloomberg’s Odd Lots podcast, Ferguson described his position as follows:

“If we really vigorously enforce the competition laws, we avoid the need for regulation.”

Fewer laws regulating what companies can do, in other words. But that presupposes the playing field was fair to begin with. And that is precisely what the FTC is alleging it was not. The point is that genuine competition cannot emerge when the market has already started on an unequal footing.

Meta now faces several weeks of questioning. Former senior executives including Sheryl Sandberg are being called in to account for how decisions were made during her time at the company. Meta has a strong position given that it will be difficult for the FTC to prove hypothetical scenarios.

Meta has an additional strong argument on its side: should acquisitions ever be considered truly final? The purchases of Instagram and WhatsApp were made 13 and 11 years ago respectively, and went through the standard regulatory review process at the time. If that outcome can be reversed at any point — even more than a decade later — there is a risk that no one will dare to complete any business deals at all.

China has become Apple’s biggest challenge

April 8, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 8th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Apple is caught in a squeeze as Trump’s trade tariffs hit the tech giant’s manufacturing hard. China has swiftly moved from being Apple’s most important partner — to becoming its Achilles heel.

“Designed in California. Assembled in China.”

If you use an Apple product, it is quite possible that this small phrase is engraved on the back. The symbolism is crystal clear. Apple is an American company, but its manufacturing takes place in other — substantially cheaper — countries. It is a textbook example of how globalisation has functioned and created unimaginable value for the American tech giant.

As Donald Trump’s trade tariffs are about to take effect, Apple’s close ties to China have rapidly become an enormous problem.

That relationship with China was previously Apple CEO Tim Cook’s greatest achievement at the company. He was previously chief operating officer under founder Steve Jobs, and was the person who established both the contacts and the large-scale manufacturing operations in the country.

As the relationship developed, China also grew into an important sales market, now accounting for around 17 percent of Apple’s total revenue. Apple would not be in the position it is today — the world’s most highly valued company — were it not for China and Tim Cook’s careful and pragmatic management of the relationship.

Now that same relationship has become Apple’s greatest challenge.

Equity analyst Dan Ives of Wedbush Securities describes Apple as the tech company that will be hit hardest by the trade tariffs. “The tariff economic Armageddon that Trump has unleashed is a complete disaster for Apple given its massive exposure to manufacturing in China,” Ives writes. A clearer assessment of the situation is hard to find.

That China could come to pose a problem for Apple has been known for some time. The company has therefore diversified among its manufacturing partners, investing heavily in India among other places. Around 15 percent of all iPhones are now manufactured there. A large proportion of those phones were intended to be sold on the Indian market itself, but given that the US tariff against India is 26 percent (compared with 54 percent against China), reports are now emerging that Apple is trying to significantly increase production in India.

Another theoretical option would be to try to produce iPhones in the United States. In February, Trump took credit for Apple having said it would invest 500 billion dollars in the US over a ten-year period. The majority of that investment had, however, already been pledged before Trump won the election. And the commitment is directed towards more advanced and specialised manufacturing — not ordinary phones, which remain the company’s by far most important product.

But even if Apple could move iPhone production to the United States, what would that look like in practice? The Wall Street Journal examined precisely this scenario and concluded that merely assembling the phone — with all components already in place and ready — would cost approximately ten times more to do in the United States than in China. A cost increase from 300 to 3,000 kronor per iPhone.

And if the company were then also required to manufacture every individual component in the US, the costs would quickly become astronomical. Bear in mind, too, that this unrealistic scenario already assumes that the factories would be up and running and the workforce trained and ready. It goes without saying: this is not going to happen any time soon. Perhaps never.

The irony for Apple is that it had prepared for the possibility of China becoming a problem. The thinking at the time was probably more along the lines of geopolitical risk becoming too great, or Chinese domestic interests no longer aligning with Apple’s needs. Now the threat is coming from inside the United States instead.

The trade tariffs cut straight across Apple’s entire strategy. If the company is forced to sell an iPhone with the American tariffs applied, the production cost rises from around 5,500 kronor to roughly 8,500 kronor per phone. The final price to consumers tends to be about double the production cost. How many people would be willing to pay that?

In a heated trade war between two of the world’s largest countries, it is the company that has benefited most from globalisation that also stands to lose most when trade now comes crashing down. Apple is caught between two global superpowers — and it is going to be painful.

The weak point — where the EU can hit back

April 4, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 4th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Stock markets are deep in the red as the world tries to understand how the new tariffs will hit. Caught in the middle are the American tech giants — whose global operations are now under threat.

With a combined market capitalisation of well over 120,000 billion kronor, the chiefs of the largest American tech companies had gathered to watch Donald Trump be sworn in as president again. It was late January 2025, and it would be hard to find a clearer image of the twenty-first century’s new economy.

Little did those executives realise that less than three months later, the country would have a trade policy more reminiscent of the late nineteenth century.

Rarely has such a sharp contrast arisen between the way tech giants conduct their global operations and the protectionism that Trump is now introducing with his trade tariffs.

Apple is an American company headquartered in the small city of Cupertino, about an hour south of San Francisco in California. More than half of all its sales take place outside North and South America, with 25 percent coming from Europe. Its products are manufactured to a very large extent by partners in China, and it has in recent times expanded significantly in both India and Vietnam.

Such is the complex global reality and market of this American company. And it is far from alone.

Virtually the entire world — countries, pension savers, and companies — is now trying to understand how the new tariffs will affect them. And they have very little time to prepare. The first tariffs start this weekend, and the rest follow in the middle of next week. The globalisation that placed the US at the centre of the world economy suddenly looks shakier than ever.

Once the initial shock settles, plans for retaliation will be drawn up. The EU immediately came out and stated that it would need to “support our manufacturing industry” — but also that by the end of April it would be targeting “all goods and services.”

The word “services” is particularly significant. When Trump and the US calculate what they perceive as an imbalance in trade, they have only looked at goods. This is, as noted, a very classical view of economics — one that would fit rather more comfortably a couple of centuries ago. For while a typical car sold might carry a profit margin of around 5 to 10 percent, the services company Meta — which owns Facebook and Instagram — had a profit margin of over 43 percent in its most recent quarter. But none of these services are counted in Trump’s model that dictates the tariffs.

This is almost certainly where the EU will strike back hardest. And virtually all of the tech executives who stood on Trump’s stage in January will be affected. Operations such as Amazon’s AWS, Google’s advertising, and Netflix are likely to find themselves directly in the crosshairs. Virtually all of Europe’s digital infrastructure for work and leisure runs on American services. We watch videos on Instagram, chat with colleagues on Slack, and hold meetings on Microsoft Teams. Americans, for their part, use very few European services. They may listen to music on Spotify — but further examples are hard to find. The asymmetry makes this an especially well-suited area for the EU to exploit.

Even if Trump’s rhetoric suggests otherwise, it is often difficult to find clear winners in a trade war. If the EU imposes punitive tariffs on digital services, the profit margins of American tech companies will take a hit. But the price of your Netflix subscription will likely increase too. Your pension savings — heavily influenced by American tech stocks — will be negatively affected. And this has only just begun.

The mere prospect of where this could lead has sent stock markets into a tailspin. On Thursday, over 3,000 billion kronor was wiped from Apple’s market capitalisation as American Nasdaq had its worst day in five years. The last time things were this bad, the world had just begun to grasp the effects of COVID-19. Investment bank JP Morgan raised its assessment of the risk of a global recession to 60 percent — up 20 percentage points from before Trump’s tariff announcement. China responded on Friday with 34 percent tariffs against the US.

The United States wants to drive investment at home through re-industrialisation and a focus on domestic production. But a large part of the country’s economy is locked into a globalised world that cannot be restructured quickly — or perhaps at all. You cannot move factories halfway around the globe. And even if you could, the result would be sharply higher costs for identical products.

Even patriotic business leaders in the United States have now been given serious pause for thought. One can be in principle supportive of the idea of a strong domestic market that takes care of itself. But the reality is that many American companies are locked into a globalised world that has made them both extraordinarily successful — and dependent on the rest of the world. And the tech executives in particular must be wondering what on earth they have got themselves into.

The collaboration will be presented as a success

April 2, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 2nd, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Elon Musk may be on his way out from Donald Trump’s side, but both will want to present the collaboration as a success. Going forward, Musk can be deployed — or sidelined — in whatever measure is deemed most useful to Trump.

Most people have seen it as only a matter of time before one of two things would happen: either Elon Musk would end up on a collision course with Donald Trump and come to be seen as a problem, or Musk’s companies would be hit so hard that he would be forced to focus on them.

Both of these things appear to have happened simultaneously.

The extremely expensive judicial election in Wisconsin — in which Musk handed out cheques of one million dollars to selected voters — did not go his way. The Republican candidate lost. One way to interpret this is that Musk’s popularity is not as great as Trump may have hoped. Having very large amounts of money to spend on American elections is certainly helpful, but it is evidently not always sufficient.

The other thing that happened was that Tesla reported its sales figures. The number of cars it delivered to customers was the lowest since 2022 — well below analysts’ estimates. The share price has also fallen around 30 percent since the start of the year. Elon Musk is accustomed to doing largely what he wants, but these are numbers that even he should be reacting to — especially since Tesla’s difficulties are to a significant extent bound up with Musk himself and his political involvement.

Musk is the single largest shareholder in Tesla, but he is not the only one. The company is publicly listed and several voices have been raised asking why a company with such obvious problems does not have a CEO who devotes all his time to solving them. Any other CEO would have been dismissed by the board long ago. But not Musk. He is not entirely immune, however. The majority of his wealth consists of Tesla shares, so his interests are closely tied to the company.

Beyond the Wisconsin election and Tesla’s difficulties, the DOGE project has also progressed some distance. Units have been scrapped, thousands of employees dismissed, and entire operations wound down. At some point, it becomes impossible to cut further without shutting down every department entirely. Being able to point to some form of partial victory is likely an incentive for Musk, even if the cuts fall far short of what he promised before the election. Such a partial victory is something he can now claim.

Another factor is that Musk holds the status of “special government employee,” which means he is temporarily exempt from rules on conflicts of interest and the like. This status will expire in May or June, according to Politico — which would in any case need to mark some form of change in his assignment.

Both Trump and Musk will be keen to make the collaboration look like a success. A fairly safe prediction is that they will both declare victory on the spending cuts, after which Musk will transition into a more advisory role. There he can be deployed — or sidelined — in whatever measure is judged to be most advantageous to Trump and his objectives.

Elon Musk will need to work hard to restore the trust of the market and consumers in Tesla. The electric vehicle market is undergoing enormous change and is on the verge of becoming extremely competitive, with major Chinese players pressing forward. And that was before Musk threw himself into politics and alienated prospective Tesla buyers. He faces — to put it mildly — a significant challenge ahead, and is unlikely to have any trouble filling his days once his formal political assignment comes to an end.

It’s starting to show that Musk is in debt

April 1, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on April 1st, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

When Elon Musk merges companies X and xAI, it is said to be about strategy. It looks more like a way to manage the companies’ — and the billionaire’s own — increasingly troublesome debt burden.

The world’s foremost billionaire is having a tough time right now.

Tesla is falling heavily on the stock exchange and major protests are taking place against both Elon Musk and buyers of his cars. Critics argue that he is devoting too much time to political assignments and too little to his companies.

Storm clouds have gathered in his personal finances too. The world’s richest man is most likely also one of the most heavily leveraged. And now Musk is restructuring his empire in an attempt to secure his position.

The recent announcement was that Musk is merging his companies X and xAI. Given the man’s preference for a particular letter, and the fact that Grok — xAI’s chatbot — is already integrated into X, one might assume the companies were already essentially one. According to Musk himself, the purpose of the deal is to “unlock tremendous potential” by combining the reach of X with the AI capabilities of xAI.

That integration, however, is already happening today. More likely, the deal is about something else entirely: namely Musk’s debt — and more specifically the collateral he holds against it.

Billionaires like Elon Musk are usually rich through their assets, rather than through what is available in their bank account. In Musk’s case it is his shares in companies such as SpaceX and Tesla that have made him the world’s richest person.

But from time to time, real cash is needed to cover day-to-day expenditure or new business acquisitions — such as when he bought Twitter for 44 billion dollars in 2022. The solution is typically to borrow against one’s shares to free up funds, without having to sell anything. In the case of Twitter, subsequently renamed X, the company itself was also leveraged: 12 billion dollars in loans therefore came along with the newly formed acquisition.

A further 25 billion dollars came from Musk himself, largely financed through Tesla share sales in 2022. Half of Musk’s current Tesla shares are pledged as collateral for personal loans of up to around 3.5 billion dollars. There is still headroom for Musk to borrow more against the remaining shares — but after Tesla’s share price has fallen around 30 percent so far this year, the situation has begun to look rather shakier.

One does not need to speculate about the risks of Musk’s Tesla share pledging — the company has itself acknowledged them on several occasions. In a document Tesla submitted to the American financial regulator under the heading “risks related to ownership of our shares,” one can read the following:

“If the price of our common stock were to decline significantly, Mr. Musk could be forced by one or more of the banking institutions to sell shares of Tesla to meet his loan obligations if he cannot do so through other means. Any such sales could cause the price of our common stock to decline further.”

To provide some protection against this outcome, Tesla has a policy that its most senior executives may only pledge 25 percent of their share value. But with a volatile share price, things can move quickly. Hundreds of billions of dollars in market capitalisation have been wiped from Tesla since the start of the year alone.

One might, however, wonder which bank would in practice dare to force a sale of Musk’s shares. He is not merely wealthy — he is also one of the most powerful people in the world.

The X and xAI deal looks more like something driven by Elon Musk’s personal finances than by any corporate strategy. By linking X to his fast-growing AI company, future fundraising becomes considerably simpler, and managing the companies’ and his own personal debt load becomes easier too. Should Tesla’s share price continue to fall, Musk now has a more stable asset to rely on.

Investing in one of Musk’s many companies has previously come with a premium — you get Elon Musk thrown in. That has been a partial explanation for the often high valuations. That premium — for all his companies, and perhaps most of all for Tesla — is now in the process of becoming a cost rather than a benefit for investors. Because there are other shareholders in both X and xAI. They are now being pressed into new corporate combinations backed by weak strategic arguments — for the simple reason that Musk needs to restructure and shore up his own personal finances.

Klarna’s move is bold to say the least

March 15, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on March 15th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Klarna is venturing into unknown waters by applying for a stock market listing in a turbulent market. Has the company bitten off more than it can chew?

Wearing race bib number 749, Briton Derek Redmond stands in the starting blocks. It is the 1992 Olympics in Barcelona, and he is about to run the 400-metre semifinal.

Just over halfway around the track, Redmond suddenly stops and grabs the back of his thigh. He has clearly injured himself and his race appears to be over. But then he begins to hobble forward. In the final bend, his father comes onto the track and helps him across the finish line, his arm around his son’s shoulder.

The scene is legendary. Redmond becomes a hero for finishing the race in spite of extraordinarily difficult circumstances. Preparing for a potential Olympic final is the pinnacle of any track athlete’s career. You cannot give up when you have come so close.

Late on Friday evening, Klarna announced that it was formally applying for a stock market listing on the New York Stock Exchange, NYSE. The ticker will be “KLAR.” In the opening CEO letter of the prospectus, Sebastian Siemiatkowski writes that those who choose to invest in Klarna are not merely investing in a company — but in “a new era of finance.”

A lack of self-confidence has never been Klarna’s problem, or Siemiatkowski’s. But it is impossible not to think of Derek Redmond when you know what a long journey it has been for Klarna to reach this listing. And when they are finally ready to complete it — the market is the most volatile and difficult it has been in many years. One can understand how it feels too late to turn back.

The tech-heavy Nasdaq 100 index has fallen around six percent so far this year. Affirm and PayPal — two other payment companies with some resemblance to Klarna — have fallen substantially more, around 20 percent each.

Even companies like Apple — long looking almost immune to outside forces — have fallen by twelve percent. Threats of trade tariffs and a somewhat chaotic period of new economic announcements have created exactly what markets dislike most: uncertainty and unpredictability.

Klarna likes to be a challenger and to go against conventional wisdom. Its arch-enemies are the big banks and the credit cards — the entire financial establishment, really. The company is used to being questioned and criticised. The underdog role is almost embraced. Klarna does not want to be like everyone else, and thrives on that.

Running your own race is, however, considerably easier as a private company than as a publicly listed one.

Klarna is also not an underdog in the traditional sense, with 28 billion kronor in revenues and around 675,000 retail merchant partners.

Yes, the company is substantially smaller than the major American banks. But Klarna has grown. It has become extraordinarily successful since being founded in 2005. Now customers, employees, and investors depend on it directly. Just because you feel like an underdog does not mean you need to act like one.

If you have been a success in the private market, you may need to get used to becoming one among many on the exchange. And also to following the rules — formal and informal — that apply there. Macroeconomic factors carry greater weight. You are priced as a company every single day.

When market sentiment turns sour, it will affect Klarna directly — even if it has nothing whatsoever to do with them or their business.

And sour is exactly what the market is right now. Going public in the middle of this is bold, to put it mildly.

One possible explanation is that the volatile environment may persist for a long time. Trump will be president for many more years. Will he suddenly return to conventional free trade and reverse everything he has done so far? Who knows, but probably not. Waiting for more predictable times could therefore be pointless.

If Klarna intends to be a listed company for a long time, this is precisely the kind of situation it will need to navigate sooner or later anyway.

But I keep thinking of Derek Redmond nonetheless. The determination to complete your race at all costs — even when stopping might have been the wiser choice. Redmond did indeed become a hero. But he never recovered from the injury either. Two years after that famous race, he was forced to retire prematurely.

Klarna has had an extraordinarily successful journey to reach this point. One must hope they are not risking too much simply in order to complete this particular stage exactly as originally planned.

One big question about the collapse remains unanswered

March 12, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on March 12th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Why Northvolt could not be saved is no mystery. A larger — and more important — question is why the company chose to grow so aggressively rather than first building a sustainable production operation. That question remains unanswered.

Northvolt AB’s board describes the past few months as “an exhaustive effort” to find “a viable economic and operational future.”

One might wonder if the company has ever done anything other than exactly that.

The story of Northvolt has been at least as much about financing as about batteries. And perhaps most of all about the absence of both.

Companies facing challenges with raising capital is nothing unusual in itself. Northvolt had a stock market listing in its sights and viewed it as the company’s natural long-term home. But market conditions around the world deteriorated and the company did not deliver as it should have. You cannot list a company whose factories have not even reached a fraction of their intended capacity.

The absence of batteries created an absence of financing.

To attempt to address this, Northvolt applied for restructuring in the United States in November 2024 — a so-called Chapter 11 process. That process has now failed. At the press conference, interim chair Tom Johnstone said he did not want to look backwards on this occasion but instead focus on the bankruptcy process here and now.

But a look backwards is appropriate, because the question now being asked is the same one many have been asking for many months: who was supposed to save Northvolt, exactly? Who was going to step forward and take responsibility for the long-term operations?

Johnstone gave an indirect answer to SvD: “no buyer has been interested in the entire unit.”

That is easy to understand. The operations consist of factories and factory projects around the world that are not functioning as intended. Rather than getting the factory in Skellefteå to reach its desired capacity — and only then expanding — Northvolt’s expansion plans appear to have been driven by opportunism. The green transition beckoned, and regions around the world saw an opportunity for a new wave of industrialisation: new, green jobs in a sector with its future ahead of it. Which local politician would turn that down? Northvolt struck while the iron was hot.

The warmth, however, was never greater than around the promises of what was to come.

The Northvolt Drei factory in Heide, Germany is now a construction site with an uncertain future. The 3,000 promised jobs will in all likelihood not materialise. Northvolt Six in Montreal is in a similar situation, even if those two subsidiaries are not currently in bankruptcy.

Finding a buyer willing to take on this mess always seemed improbable. There was no saviour — in the time of need or before it either.

Even if the opportunistic expansion complicated the business, there was always a clear solution to Northvolt’s problems. They needed to produce more batteries. Many, many more batteries. Their failure to do so is the simple core of what became the company’s downfall.

The difficulty of setting up this type of industrial operation in Sweden should not be underestimated. But precisely because it is so complex — why was more focus not given to solving that first? Why were operations, and their costs, scaled up so far before there was certainty about how to proceed?

Even today, we have no good answers to those questions. Acting opportunistically when the world shows great interest in your planned business is part of the explanation. But it is not sufficient as a complete one. One of Sweden’s largest ever corporate bankruptcies is now a fact, and thousands of employees have lost their jobs — staff who relocated from around the world and now sit in Skellefteå facing a deeply uncertain future. Over one hundred billion kronor in investments has been incinerated.

The responsibility rests heavily on both the company’s management and its board. The expansion was too fast, costs too high, productivity too low. Decisions about restructuring took too long — even though the need had been plainly visible for a considerable period. Whether there were grounds to believe a sustainable solution was within reach, we do not know today. Hope, as the saying goes, is the last thing to abandon us. Now even that has run out for Northvolt.

The EV giant held hostage by its own CEO

March 10, 2025
by Björn Jeffery
SvD Näringsliv

This analysis was first published in SvD Näringsliv, in Swedish, on March 10th, 2025. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.

Around 8,000 billion kronor in market value has been erased from Tesla in recent weeks. Meanwhile, the company’s CEO Elon Musk is busy with politics that is driving away customers. No other listed company would be allowed to be run like this.

For seven consecutive weeks, Tesla’s share price has fallen. That is the longest such decline the company has experienced since it was listed on the stock exchange in June 2010. Since the start of the year, almost 45 percent of the company’s market value has gone up in smoke.

In normal circumstances, the head of such a company would be working day and night to restore market confidence. But nothing is normal when it comes to Tesla.

Having a well-known and admired figurehead is a familiar strategy. Steve Jobs was long synonymous with Apple, Warren Buffett with Berkshire Hathaway, and Richard Branson with Virgin. The more exciting the person in question, the greater the interest in the company too.

But the risk of this strategy is precisely what Tesla is experiencing right now. As a business leader, one probably still has to consider Elon Musk “exciting” — just perhaps not in the way Tesla’s shareholders appreciate. While he stands alongside Donald Trump in the Oval Office, or at a political event with a chainsaw in his hand, there is an electric vehicle company whose share price is suffering.

Yes, there are executives at Tesla who can manage the business without Musk — who also runs the companies SpaceX, xAI, X, and Neuralink. But appearances matter. You cannot simply take the positive associations of a CEO. Now that public opinion has turned against him in several markets, not least in Europe, Musk has become a liability for Tesla.

In a situation like this, one should look at the board’s responsibility. In an ordinary listed company, they could have fired the CEO by now.

Chair Robyn Denholm has taken action, but not through public statements. She has, however, sold Tesla shares worth around 1.17 billion kronor since the start of the year. Elon Musk is Tesla’s largest shareholder with around 20 percent of the shares. The remaining shares are owned by others — pension funds and the like. Tesla is, for example, one of both the Fourth and Seventh AP Funds’ largest holdings. The Tesla board has a responsibility to represent their interests as well as those of its major shareholder. So why is nothing happening?

One answer comes when you look at the board’s composition. There you find JB Straubel, one of Tesla’s co-founders who served as the company’s chief technology officer for 15 years. Straubel is likely to be unusually knowledgeable, but has been a direct colleague of Musk for more than a decade.

Another name is James Murdoch, one of media mogul Rupert’s sons, who is a personal friend of Musk. A third has a familiar ring — Kimbal Musk, Elon’s brother. And in true American fashion, Elon Musk himself also sits on the board. In total there are eight members, but their independence is open to question.

Tesla therefore finds itself in a difficult position. The electric vehicle company is being held hostage, in effect, by a chief executive and major shareholder who has historically been its single greatest driver of success. It is Musk’s visions that have meant the stock has long since stopped being traded as a car company on the exchange.

Statements such as “there is a path for Tesla to become more valuable than the next five largest companies in the world combined” — something he said at the most recent quarterly report — are spectacular and conjure images of robots, self-driving cars and AI instead. The approach, whether he is right or wrong, has been successful.

But as much attention as Musk has received for his visions, he is now receiving for other things — such as, for example, suggesting that the US should leave NATO and the United Nations.

Sales of Tesla cars are falling sharply in several European countries. In a private company, his room for manoeuvre would have been greater. But Tesla is a listed company. His freedom depends on the remaining shareholders concluding that Tesla is worth more with Musk than without him. That equation has until now been extraordinarily straightforward. If the share price keeps falling in the same way, it will become considerably more complicated.