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Of course. It is standard to pay a premium over the share price in this situation.

by resoluteteeth 5y ago

tptacek 5y ago
We're not talking about the share price, we're talking about the company's projected valuation.
- resoluteteeth 5y ago
  The share price reflects the market's valuation of the company, and shareholders are not going to want to sell for a price less than the current share price plus a premium. Maybe if the board had information that hadn't been published yet showing that the company's financials had completely tanked since the last earnings report it would be different, but other than that, Twitter's financials are obviously public, and even if the board used something like the DCF method and obtained a number much lower than the market cap, that has absolutely no bearing on whether they would accept a certain price from Musk. So, no, it's really the share price that matters in this situation. Also, even if you're purely talking about valuations, there are other common valuation methods like the comparable method that look at what similar companies have received based on their share price, so the idea that the board would decide to sell purely based on cashflow projections is not correct.
  - tptacek 5y ago
    No, that's not true. The board's job is to determine how far off the share price is from what they believe the company is worth based on their own internal projections. The board is certainly not expected to take the spot price of Twitter common stock as the ground truth of the company's valuation.
    - leaflets2 5y ago
      I think that's what GP said/meant, when s/he wrote: > Maybe if the board had information that hadn't been published yet [...]
      - tptacek 5y ago
        Of course the board has information that hasn't been published yet. Every board does.
        ImPostingOnHN 5y ago
        It sounds, then, like you're agreeing with the post you replied to, which seems to already include the caveat you brought up

Of course. It is standard to pay a premium over the share price in this situation.

tptacek 5y ago

We're not talking about the share price, we're talking about the company's projected valuation.

resoluteteeth 5y ago
The share price reflects the market's valuation of the company, and shareholders are not going to want to sell for a price less than the current share price plus a premium. Maybe if the board had information that hadn't been published yet showing that the company's financials had completely tanked since the last earnings report it would be different, but other than that, Twitter's financials are obviously public, and even if the board used something like the DCF method and obtained a number much lower than the market cap, that has absolutely no bearing on whether they would accept a certain price from Musk. So, no, it's really the share price that matters in this situation. Also, even if you're purely talking about valuations, there are other common valuation methods like the comparable method that look at what similar companies have received based on their share price, so the idea that the board would decide to sell purely based on cashflow projections is not correct.
- tptacek 5y ago
  No, that's not true. The board's job is to determine how far off the share price is from what they believe the company is worth based on their own internal projections. The board is certainly not expected to take the spot price of Twitter common stock as the ground truth of the company's valuation.
  - leaflets2 5y ago
    I think that's what GP said/meant, when s/he wrote: > Maybe if the board had information that hadn't been published yet [...]
    - tptacek 5y ago
      Of course the board has information that hasn't been published yet. Every board does.
      - ImPostingOnHN 5y ago
        It sounds, then, like you're agreeing with the post you replied to, which seems to already include the caveat you brought up