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To complete the data, the company is trading at $0.34/share, so while $0.40 is a bit lower than the typical 20% premium (~$0.41), I'm not sure it counts as "low

To complete the data, the company is trading at $0.34/share, so while $0.40 is a bit lower than the typical 20% premium (~$0.41), I'm not sure it counts as "lowball". It's a typical premium over market cap. Is there any reason to think the company is worth $4.7B or whatever ($9.30/share)? If so the stock is a steal at its current price and we should all buy lots. But can the market be THAT wrong?

austhrow743 2y ago
My take on their comment was that it should be worth many billions if it was being run effectively but that it's not. That doesn't mean the market is wrong, it means the market thinks it will continue to be run ineffectively.
- s1artibartfast 2y ago
  if that is the case, isnt paying stockholders 20% over value a pretty good deal, and not a ripoff? It seems like there are contradictory facts being claimed: that the price to go private is a lowball, and that the current price is accurate.
  - austhrow743 2y ago
    If the one offering 20% over listed price is the one causing the listed price to be far more than 20% below what the company could be worth if they were running it properly, most people would consider that to be a ripoff.
    - s1artibartfast 2y ago
      That seems like conspiracy thinking. The stockholders own part of the company with current management, not some hypothetical alternative. If they sell, they are selling a stake in the real company as it exists, not the alternate reality one. Think of a more relatable example. . A rental house with crazy tenants sells for less than a vacant one. If you buy or own a stake in a business that is controlled by poor managers, you are lucky to sell for a 20% premium.
  - busterarm 2y ago
    As a sale, yes, but to take it private no. After taking the company private they could then manage the company properly and make all of the upside, completely screwing over the shareholders who they bought out. Honestly that's borderline fraud.
    - s1artibartfast 2y ago
      That would completely be fraud, but seems pretty far fetched. They have been (miss)managing the company about the same for 18 years, so it would have to be one of the most epic cons of all time. On the other hand, partial owners and management take companies private all the time. It is an extremely common occurrence. It and PE buyout are probably the two most common ways.
      - busterarm 2y ago
        Based on my parent poster's question we're already operating from the assumption that happening and I'm just explaining why that's bad, not how likely it is.
        s1artibartfast 2y ago
        I had a more charitable read of the parent post where they weren't assuming fraud, but just confused
- mtkd 2y ago
  If someone wants to delist and have equity/executive control -- there is little minority shareholders can do to prevent it in practice The controlling interest can just hire incompetent ops heads and side-line competent ones for a few quarters ... slowwalk any events that could increase value The board resigning likely helps the plan Fair chance future offers will get worse the longer it goes on
throwawayffffas 2y ago
The resignation implication is that the CEO is running the company to the ground. The comment further implies this is on purpose in order to buy the company cheaply.
- saghm 2y ago
  I'm confused by this; isn't the board of directors who picks the CEO? Or are they locked in for some period of time and don't want to wait around?
  - soganess 2y ago
    I don't know the first thing wrt how 23andMe has its governance and voting setup, but the letter seems to imply the CEO has majority power or, at least, a large enough plurality that it is a one-person-show: > Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
    - vineyardmike 2y ago
      > EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)? 1. Less legal oversight and paperwork. 2. I don’t know the terms of the buyout, but if this means the CEO, family, friends, etc (“insiders”) become the new shareholders, then any future upside will be distributed to insiders not the open market.
      - IG_Semmelweiss 2y ago
        You can have company control without having even a majority. This is similar to what zuckerberg is doing with Meta. Supervoting Class A shares vs common shares, etc. The arrangement is completely up to the governing docs of the entity.
HWR_14 2y ago
> can the market be THAT wrong? Yes. Historic examples abound of the market being that wrong. People can and have made fortunes by finding those opportunities. Which is different from is the market that wrong in this case?
bboygravity 2y ago
Yes. The market can be THAT wrong, not just wrong but also corrupt and broken (on purpose). Hint: regulatory crisis, Suzanne Trimbath, failure to deliver shares, naked shorting, Tesla shortsqueeze, VW shortsqueeze, UBS's and Swiss gov's 50 year secret, etc.
- OrigamiPastrami 2y ago
  You actually think people are familiar with most, if any, of your hints? You mention Susanne Trimbath like most people have any idea who she is. If you construct an argument instead of throwing out a buzzword salad of ideas, people are more likely to listen to you.
- kortilla 2y ago
  You’re kinda all over the place with your “hints”. Naked shorting and failure to deliver shares have zero relationship to setting a bid price people are willing to buy at. Shortsqueezes are cases of driving prices up because shares are hard to get and shorts need to cover. Again, not related to the best offer being too low. Secrets are also dumb examples because that’s hidden information. What we’re talking about here is the valuation with all of the public information available now. Nobody of any relevant market size seems to agree that it should be $9/share.
  - bboygravity 2y ago
    There is no "setting a bid price" when your order doesn't hit a lit market (hint: it doesn't, it gets routed straight to dark markets).
  - IG_Semmelweiss 2y ago
    I'm willing to grant some leeway on a shortsqueeze. If one is willing to grant that the stock "price" for a liquid listing, is the price for a stock at any given time, then you could argue the markets are "wrong" insofar that the price quoted in the open market, is absolutely not the correct price - regardless of the excuse of a short squeeze.

austhrow743 2y ago

My take on their comment was that it should be worth many billions if it was being run effectively but that it's not. That doesn't mean the market is wrong, it means the market thinks it will continue to be run ineffectively.

s1artibartfast 2y ago
if that is the case, isnt paying stockholders 20% over value a pretty good deal, and not a ripoff? It seems like there are contradictory facts being claimed: that the price to go private is a lowball, and that the current price is accurate.
- austhrow743 2y ago
  If the one offering 20% over listed price is the one causing the listed price to be far more than 20% below what the company could be worth if they were running it properly, most people would consider that to be a ripoff.
  - s1artibartfast 2y ago
    That seems like conspiracy thinking. The stockholders own part of the company with current management, not some hypothetical alternative. If they sell, they are selling a stake in the real company as it exists, not the alternate reality one. Think of a more relatable example. . A rental house with crazy tenants sells for less than a vacant one. If you buy or own a stake in a business that is controlled by poor managers, you are lucky to sell for a 20% premium.
- busterarm 2y ago
  As a sale, yes, but to take it private no. After taking the company private they could then manage the company properly and make all of the upside, completely screwing over the shareholders who they bought out. Honestly that's borderline fraud.
  - s1artibartfast 2y ago
    That would completely be fraud, but seems pretty far fetched. They have been (miss)managing the company about the same for 18 years, so it would have to be one of the most epic cons of all time. On the other hand, partial owners and management take companies private all the time. It is an extremely common occurrence. It and PE buyout are probably the two most common ways.
    - busterarm 2y ago
      Based on my parent poster's question we're already operating from the assumption that happening and I'm just explaining why that's bad, not how likely it is.
      - s1artibartfast 2y ago
        I had a more charitable read of the parent post where they weren't assuming fraud, but just confused
mtkd 2y ago
If someone wants to delist and have equity/executive control -- there is little minority shareholders can do to prevent it in practice The controlling interest can just hire incompetent ops heads and side-line competent ones for a few quarters ... slowwalk any events that could increase value The board resigning likely helps the plan Fair chance future offers will get worse the longer it goes on

throwawayffffas 2y ago

The resignation implication is that the CEO is running the company to the ground. The comment further implies this is on purpose in order to buy the company cheaply.

saghm 2y ago
I'm confused by this; isn't the board of directors who picks the CEO? Or are they locked in for some period of time and don't want to wait around?
- soganess 2y ago
  I don't know the first thing wrt how 23andMe has its governance and voting setup, but the letter seems to imply the CEO has majority power or, at least, a large enough plurality that it is a one-person-show: > Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
  - vineyardmike 2y ago
    > EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)? 1. Less legal oversight and paperwork. 2. I don’t know the terms of the buyout, but if this means the CEO, family, friends, etc (“insiders”) become the new shareholders, then any future upside will be distributed to insiders not the open market.
    - IG_Semmelweiss 2y ago
      You can have company control without having even a majority. This is similar to what zuckerberg is doing with Meta. Supervoting Class A shares vs common shares, etc. The arrangement is completely up to the governing docs of the entity.

HWR_14 2y ago

> can the market be THAT wrong? Yes. Historic examples abound of the market being that wrong. People can and have made fortunes by finding those opportunities. Which is different from is the market that wrong in this case?

bboygravity 2y ago

Yes. The market can be THAT wrong, not just wrong but also corrupt and broken (on purpose). Hint: regulatory crisis, Suzanne Trimbath, failure to deliver shares, naked shorting, Tesla shortsqueeze, VW shortsqueeze, UBS's and Swiss gov's 50 year secret, etc.

OrigamiPastrami 2y ago
You actually think people are familiar with most, if any, of your hints? You mention Susanne Trimbath like most people have any idea who she is. If you construct an argument instead of throwing out a buzzword salad of ideas, people are more likely to listen to you.
kortilla 2y ago
You’re kinda all over the place with your “hints”. Naked shorting and failure to deliver shares have zero relationship to setting a bid price people are willing to buy at. Shortsqueezes are cases of driving prices up because shares are hard to get and shorts need to cover. Again, not related to the best offer being too low. Secrets are also dumb examples because that’s hidden information. What we’re talking about here is the valuation with all of the public information available now. Nobody of any relevant market size seems to agree that it should be $9/share.
- bboygravity 2y ago
  There is no "setting a bid price" when your order doesn't hit a lit market (hint: it doesn't, it gets routed straight to dark markets).
- IG_Semmelweiss 2y ago
  I'm willing to grant some leeway on a shortsqueeze. If one is willing to grant that the stock "price" for a liquid listing, is the price for a stock at any given time, then you could argue the markets are "wrong" insofar that the price quoted in the open market, is absolutely not the correct price - regardless of the excuse of a short squeeze.