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So, your response is that these declines don't affect you very much since you have faith in future growth of your employer's stock value to compensate you for t
by dunpeal 8y ago
So, your response is that these declines don't affect you very much since you have faith in future growth of your employer's stock value to compensate you for the current slump.
(Your current grants are only "cheap" and valuable if you expect the stock price to not only bounce back, but also go higher in the foreseeable future.)
- joshuamorton 8y agoNot quite. Let's use Amazon as an example. If I believe the market price of Amazon should be 2k, which I believe it's hit, or at least gotten within spitting distance of, this current drop could be called a temporary dip (I'm not saying I necessary hold this view, but to demonstrate). Since Amazon is currently trading at 1.5k, if I get granted 30k in stock, I get 20 shares instead of 15, which when the stock returns to it's correct price, will now be worth 40k. I make 10k, just due to the bounce. Now this is impacted by a lot of specifics about how your are granted stock, options, or rsus, but that's the idea.
- dunpeal 8y agoSure, I totally agree with that. My comment was just to the effect that GP's comment implies that belief, i.e. that their employer's current stock price is undervalued (like how AMZN is currently trading for $1.5k but is actually worth $2k). Had they believed the stock is currently fairly priced, there's no reason to call these RSUs "cheap" or expect much excess return on them at vesting. Worst case scenario: if they're still overvalued, then further declines can be expected, and any grant denominated by RSUs is actually worth less than its nominal cash value.