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I saw a twitter commentator point out that this is higher than the $40B Nvidia wanted to buy it for. Argument was that stricter antitrust could actually lead to
by rendang 3y ago
I saw a twitter commentator point out that this is higher than the $40B Nvidia wanted to buy it for. Argument was that stricter antitrust could actually lead to greater shareholder value.
- blibble 3y agothe IPO is only for a fraction of the company's shares whereas the $40B would have been for 100% of them
- TradingPlaces 3y agoThe valuation includes the shares Softbank kept (~90%)
- alex_young 3y agoCurrent share price is only the price the last trade was made at. It would be remarkable if the other 90% could sell for anywhere near that number. Comparing an offer for the entire company to selling 10% to the public is a bit lopsided.
- TradingPlaces 3y agoThat is why they only sold 10%. They think they can keep market depth thin, raise the price, and sell more over time at higher prices when they need cash. This is exactly what Intel is doing with Mobileye. It’s a piggy bank that they will break open from time to time.
- blibble 3y agowhich is why it's meaningless to try to equate market cap with an unconditional instantaneous purchase of all outstanding shares
- arcticbull 3y agoGenerally if you want to buy the whole thing / take it private, you have to pay out all shareholders in cash the public market price plus a premium - you definitely don't get a discount. Just look at what happened to Elon.
- blibble 3y agoyou don't know what the public market price is for the majority of the shares as only 10% were sold today
- arcticbull 3y agoI don't know what that means - but when an individual or a company looks to buy out another company wholesale, they do in fact use the public market price, multiply it out by the full share cap, and then add a premium on top. That's literally how a buyout works.
- blibble 3y ago> I don't know what that means maybe we should stop here then
- arcticbull 3y agoYour sentence didn't make sense - just look up how buyouts work and how they're priced.
- RussianCow 3y agoThat's literally not how buyouts work. The public stock price is certainly one factor of many that go into calculating the acquisition price, but it is not an absolute floor. One counter-example that comes to mind is Yahoo!, which was purchased by Verizon for less than its market cap at the time.
- 3y ago
- cunac 3y agomarket cap is same as 100% of shares so it is $25B more than Nvidia price
- blibble 3y agoonly if you assume there is the same level of instantaneous demand for a supply of 10x as many shares definitely not the case
- arcticbull 3y agoThat is what you assume when you look to take a company private.
- twoodfin 3y agoThink about it this way: The current market price represents the amount the shareholders who least value their shares would be willing to sell them for. As you want to acquire more, the price is going to go up, not down.
- RussianCow 3y agoThat's pretty irrelevant if it only represents 10% of the total equity, though. It's not like you, as a retail investor who owns a few shares of a company, have any say in whether it gets acquired.
- twoodfin 3y agoSoftBank values continuing to hold the other 90% of the shares more than the market price or they’d be selling more.
- TradingPlaces 3y agoAlso keep in mind that Softbank was going to keep part of the company (IoT) in the Nvidia deal.
- devnullbrain 3y agoNvidia is worth over 3 times as much as it was at the start of the attempted acquisition.