4 ms·

> Most if not all of these people can't liquidate even close to their "net worth" I think that's broadly true, though some of the older ones might be able to.

> Most if not all of these people can't liquidate even close to their "net worth" I think that's broadly true, though some of the older ones might be able to. Bill Gates, for example, has diversified his wealth out of Microsoft (and he doesn't control the company these days, anyway). I don't think the market would punish Berk or AutoNation, for example, nearly as hard as they've punished Tesla for Elon cutting his ownership stake.

grumple 5y ago
It's not punishment. Stock price * shares != actual value of the company. As more shares go onto market, demand naturally decreases as supply satiates existing demand, thus causing the price to decrease. I'm sure this is covered in some basic economics course that I never took.
- rootusrootus 5y ago
  Call it what you will, I don't think it's just the economics of putting more shares on the market. When the CEO dumps ownership, he is signaling a lack of confidence.
  - Bubble_Pop_22 5y ago
    What did Bill Gates signal when he diverted his Microsoft stock into the Bill Gates Foundation back when he was forced to step down as CEO after the antitrust lawsuit? Not all sales are equal. Here you have a guy who essentially arrived at the end of the road and brought Microsoft where only Standard Oil arrived before. Both had extinguished all their natural competitiors and had to be essentially stopped by the US Federal Govt. Stark contrast with the CEO of a luxury automaker who inflated a financial bubble to enrich himself who is now selling to buy a social media platform.
- tempestn 5y ago
  And yet we treat the market cap as the actual value of the company. Also, sometimes the actual value can be more—for instance if a buyer comes along who wants all of your company, to take it private. It would be interesting if there were some way to calculate something like the "cash net worth" of individuals. Work out what they could actually reasonably expect to get if they liquidated all their assets. Obviously it would be a pretty rough estimate, but you'd definitely see some reshuffling of the richest people lists.
- hooande 5y ago
  The evidence against this is that tsla stock has gone up since musk said the deal was "on hold". This may be because the market expects him to not have to increase supply by selling more shares, but he's already trying to arrange outside funding to limit what he has to sell. It could be that confidence in musk and his brand is having more of an impact on share price than supply and demand. He's behaving erratically and is clearly distracted from running tesla by this twitter fiasco. I'm not sure what weighs more on the minds of institutional investors.

grumple 5y ago

It's not punishment. Stock price * shares != actual value of the company. As more shares go onto market, demand naturally decreases as supply satiates existing demand, thus causing the price to decrease. I'm sure this is covered in some basic economics course that I never took.

rootusrootus 5y ago
Call it what you will, I don't think it's just the economics of putting more shares on the market. When the CEO dumps ownership, he is signaling a lack of confidence.
- Bubble_Pop_22 5y ago
  What did Bill Gates signal when he diverted his Microsoft stock into the Bill Gates Foundation back when he was forced to step down as CEO after the antitrust lawsuit? Not all sales are equal. Here you have a guy who essentially arrived at the end of the road and brought Microsoft where only Standard Oil arrived before. Both had extinguished all their natural competitiors and had to be essentially stopped by the US Federal Govt. Stark contrast with the CEO of a luxury automaker who inflated a financial bubble to enrich himself who is now selling to buy a social media platform.
tempestn 5y ago
And yet we treat the market cap as the actual value of the company. Also, sometimes the actual value can be more—for instance if a buyer comes along who wants all of your company, to take it private. It would be interesting if there were some way to calculate something like the "cash net worth" of individuals. Work out what they could actually reasonably expect to get if they liquidated all their assets. Obviously it would be a pretty rough estimate, but you'd definitely see some reshuffling of the richest people lists.
hooande 5y ago
The evidence against this is that tsla stock has gone up since musk said the deal was "on hold". This may be because the market expects him to not have to increase supply by selling more shares, but he's already trying to arrange outside funding to limit what he has to sell. It could be that confidence in musk and his brand is having more of an impact on share price than supply and demand. He's behaving erratically and is clearly distracted from running tesla by this twitter fiasco. I'm not sure what weighs more on the minds of institutional investors.