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Let's say you give me 20 bucks, and I drop it. But only one time. Does that mean I didn't lose your $20?
by moate 7y ago
Let's say you give me 20 bucks, and I drop it. But only one time.
Does that mean I didn't lose your $20?
- astrodust 7y agoWasn't there a Seinfeld episode about this?
- umeshunni 7y agoLet's say I take a piece of paper, tell you that it's worth $20 and give it you. And then you drop it. Did you lose $20? That's a closer analogy to SBC than losing cash.
- toasterlovin 7y agoDilution of ownership goes in two directions. You pointed out that it could be less valuable than the book value. But if the company does well, then the cost of that dilution actually increases over time.
- moate 7y agoCloser! Let's say you give me a coupon that I'm able to redeem from you later for 20 dollars. Do you owe me $20? This is the closest to what SBC is. If the options are exercised, you're liable for that expense. It's a delay on the payment of the 20 dollars helping cash flow, and tax code yadda yadda, but you can't pretend that handing out vouchers for money to employees doesn't mean you're not liable for the money from an outsider assessing your financials.
- throwaway082729 7y agoThe other way to look at it is that potentially $3.9B worth of stock could be sold on the public market and further dilute the value of the stock.