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The shares can’t lose money (in theory) because with the extended exercise period you can simply not exercise them if they are underwater. It's not a unique be

The shares can’t lose money (in theory) because with the extended exercise period you can simply not exercise them if they are underwater. It's not a unique benefit, many companies offer the extended exercise window, but it is very good for employees because otherwise they have 90 days to exercise or abandon the options. In your mind you are imagining somebody with a few options that are barely in the money. What if somebody who got laid off has worked there for 5 years and is sitting on super valuable options. With no extended window they'd be in a huge pickle where they'd either have to abandon all their options or pay a huge exercise/tax bill right now. But with the extended window they don't. Neither of us can predict the future of patreons valuation so you shouldn't assume things are going to go badly and thus this benefit will not matter. The whole point of stock options is the option part of it. Maybe it will be worth a lot, maybe it won't, but you'd like to wait and find out and shouldn't have to give that up because you were laid off.

PopAlongKid 4y ago
>The shares can’t lose money (in theory) because with the extended exercise period you can simply not exercise them if they are underwater. Incorrect. Yes, one would not exercise options that are already underwater, but once you own the shares and there is a post-IPO lockup period[0] you most definitely can lose money on the shares, money on which you already were taxed at ordinary tax plus FICA rates. Try looking at the volatility of company share prices in the period immediately after their IPO. >you really have not even a basic understanding of how this works? You also have not addressed the strong possibility of being acquired rather than going public. (Ex-)employees do not make any money until after all the VC people do, and there may not be much left. Again, I never said this was a bad thing, more like a "meh" thing. [0]https://www.investopedia.com/ask/answer/12/ipo-lockup-period.asp https://www.investopedia.com/ask/answer/12/ipo-lockup-period...
- peter422 4y ago
  Exercise and sell is an instant prices. If you choose to exercise and hold obviously you now have the volatility of owning the stock, I'm not talking about that. Yes preferred share classes exist, this is irrelevant to whether or not the options have option value! I'm not guaranteeing that Patreon stock will be worth a lot of money, only that it might be worth a lot of money.

PopAlongKid 4y ago

>The shares can’t lose money (in theory) because with the extended exercise period you can simply not exercise them if they are underwater. Incorrect. Yes, one would not exercise options that are already underwater, but once you own the shares and there is a post-IPO lockup period[0] you most definitely can lose money on the shares, money on which you already were taxed at ordinary tax plus FICA rates. Try looking at the volatility of company share prices in the period immediately after their IPO. >you really have not even a basic understanding of how this works? You also have not addressed the strong possibility of being acquired rather than going public. (Ex-)employees do not make any money until after all the VC people do, and there may not be much left. Again, I never said this was a bad thing, more like a "meh" thing. [0]https://www.investopedia.com/ask/answer/12/ipo-lockup-period.asp https://www.investopedia.com/ask/answer/12/ipo-lockup-period...

peter422 4y ago
Exercise and sell is an instant prices. If you choose to exercise and hold obviously you now have the volatility of owning the stock, I'm not talking about that. Yes preferred share classes exist, this is irrelevant to whether or not the options have option value! I'm not guaranteeing that Patreon stock will be worth a lot of money, only that it might be worth a lot of money.