3 ms·

I just don't see them wrestling control away from the deranged, cult leader. He truly believes he is destined to be president of the world and revolutionize.. w

I just don't see them wrestling control away from the deranged, cult leader. He truly believes he is destined to be president of the world and revolutionize.. well every thing. There best bet would be to drop the multi-class structure to get into passive funds. It needs $8.1b market cap to get into S&P500.

0xB31B1B 7y ago
It also needs to be ebita profitable for 8 quarters in a row before its added to the index IIRC
- rwmurrayVT 7y ago
  I think it's most recent quarter + 4 previous. I'm also fairly certain it's selected by committee. I'm no finance expert, hence the securities fraud conviction. I don't really know which index it could get into with a high amount of passive investment.
YPCrumble 7y ago
Is this part of the business model of these large, unprofitable VC-backed companies? Build a valuation to meet the 8.1bn threshold, then sell the shares to passive investors in S&P 500 index funds?
- deleted 7y ago
  [deleted]
- hef19898 7y ago
  And for VC's to build a story and evaluation interesting enough for SoftBank to buy in? Because it sometimes seems like it...
- mruts 7y ago
  No. The S&P 500 is selected by committe. And it's 6.1bn, not 8.1bn. Mabye that's the plan for the Russell 3000, though. But it doesn't really matter except when the stock gets added to the index. The index funds and ETFs are going to rebalance their positions based on market cap and will not affect the price. These funds could affect the volatility though, since it's conceivable that with a lot of the shares locked up, these stocks are going to be more thinly traded than they would have otherwise been. This could create price instability, though I'm not sure there's any proof that it's true.
  - kgwgk 7y ago
    > But it doesn't really matter except when the stock gets added to the index It does matter when there are inflows, if there is new money coming into index funds all the stocks in the index benefit (they funds also sell all the stocks in the index when there are outflows). Non-indexed stock are less coupled to flows in and out of trackers.
  - rwmurrayVT 7y ago
    Not true. [0] >...Unadjusted company market capitalizations of US$8.2 billion or more for the S&P 500..... are required. [0] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...
    - mruts 7y ago
      Hmm. I guess it just changed this year. My bad!
      - rwmurrayVT 7y ago
        I saw $6.1b first as a Google given answer. It said different on Wikipedia so I investigated the source. I knew my high school teachers were wrong about Wikipedia!
john_moscow 7y ago
>He truly believes he is destined to be president of the world and revolutionize. I am not sure. He has been pretty methodical in siphoning the money out of the company (privately leasing the real estate to We, charging them for the trademark, etc), so he probably knows very well what he is doing. Somehow, if you act this way, investors will perceive you as a charismatic and energetic leader and buy in even if your business model doesn't make much sense. IIRC, similar happened to Juicero, albeit on a much smaller scale: countless talks about expanding consciousness, changing the world, raw water bollocks, a completely unsustainable business model and questionable transactions to some external consultants.
- dbuder 7y ago
  Please point me to where I can read more about the Juicero story, particularly the external consultants. It was just so comically bad on every level, it made me lose alot of respect for VCs.

0xB31B1B 7y ago

It also needs to be ebita profitable for 8 quarters in a row before its added to the index IIRC

rwmurrayVT 7y ago
I think it's most recent quarter + 4 previous. I'm also fairly certain it's selected by committee. I'm no finance expert, hence the securities fraud conviction. I don't really know which index it could get into with a high amount of passive investment.

YPCrumble 7y ago

Is this part of the business model of these large, unprofitable VC-backed companies? Build a valuation to meet the 8.1bn threshold, then sell the shares to passive investors in S&P 500 index funds?

deleted 7y ago
[deleted]
hef19898 7y ago
And for VC's to build a story and evaluation interesting enough for SoftBank to buy in? Because it sometimes seems like it...
mruts 7y ago
No. The S&P 500 is selected by committe. And it's 6.1bn, not 8.1bn. Mabye that's the plan for the Russell 3000, though. But it doesn't really matter except when the stock gets added to the index. The index funds and ETFs are going to rebalance their positions based on market cap and will not affect the price. These funds could affect the volatility though, since it's conceivable that with a lot of the shares locked up, these stocks are going to be more thinly traded than they would have otherwise been. This could create price instability, though I'm not sure there's any proof that it's true.
- kgwgk 7y ago
  > But it doesn't really matter except when the stock gets added to the index It does matter when there are inflows, if there is new money coming into index funds all the stocks in the index benefit (they funds also sell all the stocks in the index when there are outflows). Non-indexed stock are less coupled to flows in and out of trackers.
- rwmurrayVT 7y ago
  Not true. [0] >...Unadjusted company market capitalizations of US$8.2 billion or more for the S&P 500..... are required. [0] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...
  - mruts 7y ago
    Hmm. I guess it just changed this year. My bad!
    - rwmurrayVT 7y ago
      I saw $6.1b first as a Google given answer. It said different on Wikipedia so I investigated the source. I knew my high school teachers were wrong about Wikipedia!

john_moscow 7y ago

>He truly believes he is destined to be president of the world and revolutionize. I am not sure. He has been pretty methodical in siphoning the money out of the company (privately leasing the real estate to We, charging them for the trademark, etc), so he probably knows very well what he is doing. Somehow, if you act this way, investors will perceive you as a charismatic and energetic leader and buy in even if your business model doesn't make much sense. IIRC, similar happened to Juicero, albeit on a much smaller scale: countless talks about expanding consciousness, changing the world, raw water bollocks, a completely unsustainable business model and questionable transactions to some external consultants.

dbuder 7y ago
Please point me to where I can read more about the Juicero story, particularly the external consultants. It was just so comically bad on every level, it made me lose alot of respect for VCs.