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Not sure about this case, but owning all trading shares doesn't mean owning the company. A company may have only 2% of its value as public shares and the rest o
by sn_master 6y ago
Not sure about this case, but owning all trading shares doesn't mean owning the company. A company may have only 2% of its value as public shares and the rest owned by the company itself.
- deleted 6y ago[deleted]
- koolba 6y agoIf you own all the shares then you can control the company via voting control. That’d generally allow you to prevent the issuance of new shares and you could hand pick the board as their terms expire. It’s not immediate, but you’d eventually be in control of everything.
- brockwhittaker 6y agoNot all shares have voting power, and even so the voting power of those shares (if they were 2% of the company for example) may be proportionally tiny compared to the founders/board/execs. For example shareholders don't have any control at FB, since Mark controls 51% of the voting power.
- YZF 6y agoIt's fairly unusual to have companies with this sort of structure. Why would you ever buy shares in a company that doesn't pay dividends and where you can get infinitely diluted and have no control? (other than for speculative reasons)
- recursive 6y agoMaybe the future potential of dividends?
- echelon 6y ago> doesn't pay dividends Tech/growth doesn't pay dividends as dividends are a signal your business is done growing. Dividend companies would rather return capital to investors than place more bets and keep growing. Tech and growth stocks have minted many millionaires. And sometimes overnight. This is also why growth companies sometimes don't reach profitability. They're spending their revenue eating the rest of the market and gaining monopoly. > no control? People that invested in Facebook made lots of money. They were probably fine with the arrangement. If they stop being fine with it, the stock price will decline.
- astrange 6y agoDiscounted future cash flow includes all of dividends, possible future acquisition, and greater fools buying it from you. The last one being what drives Tesla and cryptos.
- phonon 6y agoNYSE: SNAP ("Snapchat") listed shares have no voting rights, and they seem to be doing okay.
- bhk 6y agoAnd GOOG seems to be doing okay.
- entangledqubit 6y agoAmusingly, the voting shares are currently worth less than the nonvoting.
- bhk 6y agoThey should issue a class of shares that are guaranteed to never pay a dividend or be redeemable for anything. Maybe they will trade even higher!
- sn_master 6y agoI just checked and you are right (1835 vs 1827). Funnily, there is this: "but unlike common shares, they do not confer voting rights to shareholders. As a result, these shares tend to trade at a discount to Class-A shares. " https://www.investopedia.com/ask/answers/052615/whats-difference-between-googles-goog-and-googl-stock-tickers.asp https://www.investopedia.com/ask/answers/052615/whats-differ...
- Ntrails 6y agoOwning a controlling share, and owning company are not the same thing - even from a simple net worth point of view.
- monadic3 6y agoObviously not, but many times they are equivalent in role. Many times when people say "own" they mean "control"—I'm guilty of this myself, as high valued companies are rarely wholly individually owned.
- ineedasername 6y agoIf you own all of the voting shares sure. But a company can have 100,000,000 shares, own 99,000,000 of them, so only 1,000,000 are trading. If you buy all 1,000,000 of those shares you don't have much power.
- dragonwriter 6y agoIf you have 100% of the outstanding shares, you have 100% of the voting rights; treasury stock doesn't vote.
- phyalow 6y agoYou are both right, but you are missing the point. It is entirely possible for controlling interests to be held in other classes of shares (or even common), that is not counted in the FREE float available to trade.
- ineedasername 6y agoNo, someone could own the entire float of Facebook shares, and Zuckerberg still has a majority of the voting rights.
- dragonwriter 6y agoThat's about two classes of outstanding stock with different rights held by different group of stockholders, not about stock held by the issuing company. That's not the hypothetical that was posed.
- ineedasername 6y agoFair enough, but your comment wasn't phrased specific to that example, it was a general statement about owning 100% of outstanding shares: If you have 100% of the outstanding shares, you have 100% of the voting right Let's chalk it up to a miscommunication.
- 6y ago
- rblatz 6y agoBut with all the hassle of reporting earnings and being publicly traded it would have surely been cheaper for the company to buy back those shares.
- sn_master 6y agoNot always. Saudi Aramco went public with only 1.5% of their value, and that was 25 Billion dollars, a good amount by any measure, specially useful when you need $$$ for weapons for your war in Yemen. Besides the money, they also wanted to test the waters before going in with a larger percentage and I don't know if the market could have handled a new 1.7 Trillion dollar company joining all at once. https://www.investopedia.com/what-is-saudi-aramco-4682590 https://www.investopedia.com/what-is-saudi-aramco-4682590