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> Well unless they pay no dividend, have dual-class share structure, and IPO without a profitable quarter. What’s a share of SNAP entitle you to exactly? Ah rig
by kaashif 5y ago
> Well unless they pay no dividend, have dual-class share structure, and IPO without a profitable quarter. What’s a share of SNAP entitle you to exactly? Ah right, you think someone will buy it for more.
I think the idea would be like what happened to Apple: they eventually grew so much, became so successful, accumulated huge piles of cash bigger than they could possibly spend, that they had to start paying a dividend.
And there is a difference between a company with an inherently unprofitable business model, and a company that would be profitable if they didn't spend so much on growth. Admittedly, it is pretty hard to distinguish those sometimes, especially with the endless rounds of Series D, E, F, G, H, I, etc funding some startups are getting.
That is all speculative, but it's not unproductive beanie babie trading. It is pretty close, especially when the only rationalisation I can think of involves Apple paying dividends, which they didn't do for decades, and Facebook and Google still don't.
Even tulip selling is actually a real business, the tulip mania wasn't as bad as crypto from the "real value" perspective, I think.
- sjtindell 5y agoDo you consider running a poker table a “real business”? Assuming there were no addicts present, what about a casino? Is that “real”?
- jayd16 5y agoIsn't a casino with no addicts just an arcade? I'm not sure what your point is, though. The addicts are pretty inextricable.
- sjtindell 5y agoPerhaps let's just talk running a poker table. It's a platform where people can play a zero sum game against each other. To me, that's what cryptocurrency is. People want to play these games. That, to me, is real value.
- SgtBastard 5y agoNitpick: the House rake makes poker not zero sum amongst players.
- mcguire 5y agoWhat's the house rake in cryptocurrency?
- SgtBastard 5y agoTXN fees for miners to secure the chain.
- sjtindell 5y agoTrue. I thought of it as apt because the exchanges/miners, etc. take a fee.
- selectodude 5y ago>I think the idea would be like what happened to Apple: they eventually grew so much, became so successful, accumulated huge piles of cash bigger than they could possibly spend, that they had to start paying a dividend. Not a great example, Apple paid out a quarterly dividend from 1987 to 1995. They paid out a dividend in those years because they were cashflow positive and that was just the thing you did because the idea of "hypergrowth" wasn't a thing.
- H8crilA 5y agoNot to mention they were GAAP profitable pre IPO, same as Google, Facebook and Microsoft. Pull up the old S-1s if you don't believe me.
- vitaflo 5y agoDon’t forget share buybacks, which have become more popular as of late. Dell being the prime example in the tech industry by leveraged buyout and making it private.
- solveit 5y ago> they eventually grew so much, became so successful, accumulated huge piles of cash bigger than they could possibly spend, that they had to start paying a dividend. What mechanism forces this?
- Panzer04 5y agoInvestors forcing the replacement of shareholder-unfriendly management. US companies tend to be better at returning cash to shareholders by buyback or dividend than many other locations (probably half the reason Asian shares are often cheap, they hold loads of useless money on the balance sheet)
- tedunangst 5y agoBillionaire activist investors.
- H8crilA 5y agoThe board of directors.