3 ms·
Nah, there's a big discount because preferred shares have downside protection (as well as a few other valuable things general) so common stock is valued lower.
by harryh 11y ago
Nah, there's a big discount because preferred shares have downside protection (as well as a few other valuable things general) so common stock is valued lower. Generally a 70% discount or so.
- elsewhen 11y agothe discount varies by investment round. common shares for early stage companies come with a huge discount. or perhaps it is clearer to say that preferred shares come with a huge premium primarily because the liquidation preference (LP) is so valuable at that stage). preferred shares in later rounds have a much lower premium, because investors don't value the LP as much.