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That explanation sounds like they are just giving away shares, which they aren't. Other parties get the _right_ to buy additional new shares at a reduced rate.
by ascar 4y ago
That explanation sounds like they are just giving away shares, which they aren't. Other parties get the _right_ to buy additional new shares at a reduced rate.
- colinmhayes 4y ago> Other parties get the _right_ to buy additional new shares at a reduced rate. This is effectively the same as giving away shares.
- ascar 4y agoI think that oversimplifies the dynamics drastically. First off, even if buying the shares at the reduced rate is highly profitable, you do need the cash to buy them. With the 50% that are floating around here that's a significant amount of cash. Furthermore, with the dilution that's happening the stock price would also drop so while you gain on the reduced shares, you loose on money on your old shares unless Elon keeps buying. I just don't see that it's the same as giving away shares for free (which is just adding dilution without additional capital costs for the existing shareholder). Feels to me like an all parties lose situation if it's triggered.
- w23j 4y agoThe other shareholders don't need to have the money: "Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money." (From a recent Money Stuff.)