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Why would shareholders be willing to give up something for less than they think it is worth

wpietri 3y ago
Just looking at the stock price graph over the last few years, where it has fallen nearly 90%, they might be glad to have their misery put to an end. Remember that market price is what you can get for selling a small number of shares. But the companies that own large blocks may not be able to exit their positions in the normal market without taking a further loss.
- fauxpause_ 3y ago
  It’s a liquid stock. You can sell it right now. There’s no world where you hope for it to get bought at less than the current market price but don’t think it makes sense to sell your holdings at the current price. This is true even if the selling of your holdings causes the market price to drop.
  - wpietri 3y ago
    The top 10 Lyft shareholders between them own 38.2% of the company. The single largest shareholder alone has 13.3%. Is your serious belief that the top shareholder can just go out and sell their 49,198,218 shares and get the current market price for each one? Who exactly do you think is hanging around with a half-billion in cash thinking "Gosh, Lyft would be a good buy if it were one cent lower, but it's not good enough for me to buy right now?"
    - fauxpause_ 3y ago
      Is your serious belief that people can only buy or sell their entire collection of shares as one unit? Because that’s the only way your post makes any sense. If you own $1B shares of Lyft, and you think it would be great to sell them for less than X, you’d be pretty dumb for not selling whatever you can at X. The fact that they are not doing this suggests they would not be happy to sell for less than X.
      - wpietri 3y ago
        That's not the case at all. You're presuming a level of liquidity that just isn't there. You're also presuming that nobody pays attention to a large shareholder selling lots of stock. But these number are public. If a major Twitter shareholder starts selling things off, even if they do it slow enough that the price doesn't fall too far right way, people will notice, taking at a signal that the major shareholder has a good reason to sell, thus causing the price to drop. These large shareholders might be quite happy to have a way out without taking further losses, even if it doesn't mean further gains.
        fauxpause_ 3y ago
        I don’t know what to say other than that you’re wrong. you can easily sell lyft shares. The public generally does not know who holds lyft shares or when they’re sold or care when they do. The only exception to this is those with insider information. But even then most people don’t care.
        wpietri 3y ago
        You can easily sell a few Lyft shares. You cannot easily sell a billion dollars worth of Lyft shares because the market is not liquid enough for that. If you seriously think there's somebody out there with that kind of money just waiting to buy at current market price, please say who you think they are, because I believe they don't exist. The major shareholders of Lyft are absolutely known, and that's because federal law requires disclosure from everybody over 5%. And I promise you that people who have or who are thinking about taking a serious position in Lyft pay attention to what they're doing. An obvious example here is Musk's shenanigans with the Twitter acquisition. He was required to declare his stake publicly, which bumped the stock price. When things weren't going his way, he threatened to dump his whole stake at once, the implication being that the stock price would drop precipitously as he burned through the order book, causing much sadness among remaining investors.
        fauxpause_ 3y ago

Just looking at the stock price graph over the last few years, where it has fallen nearly 90%, they might be glad to have their misery put to an end. Remember that market price is what you can get for selling a small number of shares. But the companies that own large blocks may not be able to exit their positions in the normal market without taking a further loss.

fauxpause_ 3y ago
It’s a liquid stock. You can sell it right now. There’s no world where you hope for it to get bought at less than the current market price but don’t think it makes sense to sell your holdings at the current price. This is true even if the selling of your holdings causes the market price to drop.
- wpietri 3y ago
  The top 10 Lyft shareholders between them own 38.2% of the company. The single largest shareholder alone has 13.3%. Is your serious belief that the top shareholder can just go out and sell their 49,198,218 shares and get the current market price for each one? Who exactly do you think is hanging around with a half-billion in cash thinking "Gosh, Lyft would be a good buy if it were one cent lower, but it's not good enough for me to buy right now?"
  - fauxpause_ 3y ago
    Is your serious belief that people can only buy or sell their entire collection of shares as one unit? Because that’s the only way your post makes any sense. If you own $1B shares of Lyft, and you think it would be great to sell them for less than X, you’d be pretty dumb for not selling whatever you can at X. The fact that they are not doing this suggests they would not be happy to sell for less than X.
    - wpietri 3y ago
      That's not the case at all. You're presuming a level of liquidity that just isn't there. You're also presuming that nobody pays attention to a large shareholder selling lots of stock. But these number are public. If a major Twitter shareholder starts selling things off, even if they do it slow enough that the price doesn't fall too far right way, people will notice, taking at a signal that the major shareholder has a good reason to sell, thus causing the price to drop. These large shareholders might be quite happy to have a way out without taking further losses, even if it doesn't mean further gains.
      - fauxpause_ 3y ago
        I don’t know what to say other than that you’re wrong. you can easily sell lyft shares. The public generally does not know who holds lyft shares or when they’re sold or care when they do. The only exception to this is those with insider information. But even then most people don’t care.
        wpietri 3y ago
        You can easily sell a few Lyft shares. You cannot easily sell a billion dollars worth of Lyft shares because the market is not liquid enough for that. If you seriously think there's somebody out there with that kind of money just waiting to buy at current market price, please say who you think they are, because I believe they don't exist. The major shareholders of Lyft are absolutely known, and that's because federal law requires disclosure from everybody over 5%. And I promise you that people who have or who are thinking about taking a serious position in Lyft pay attention to what they're doing. An obvious example here is Musk's shenanigans with the Twitter acquisition. He was required to declare his stake publicly, which bumped the stock price. When things weren't going his way, he threatened to dump his whole stake at once, the implication being that the stock price would drop precipitously as he burned through the order book, causing much sadness among remaining investors.
        fauxpause_ 3y ago