3 ms·

Well, when the company issues shares, then the money goes into their account, right?

by cheschire 5mo ago

whall6 5mo ago
Meta was a $26 Bn net purchaser (opposite of issuer)
- cheschire 5mo ago
  Buying back shares it sold at a lower price, right? The lifecycle of a share starts with the transfer of money to a company in exchange for a share. It ends with a buy back, ideally at a higher price. But still, at the beginning it is a transfer into the company’s coffers.
  - whall6 5mo ago
    The life cycle of a share starts at IPO. The S&P 500 does not add companies to its index until at least 12 months after IPO. Also, Meta issued 180 MM new shares at $38/share at IPO. That’s ~$7 Bn. Which is less than 1/4th of what they repurchased just last year. Between share repurchases and dividends, S&P 500 companies are putting money into the markets, not pulling it out.
    - PNewling 5mo ago
      > The S&P 500 does not add companies to its index until at least 12 months after IPO. Unless you're SpaceX [0], then the rules have exceptions... [0] https://finance.yahoo.com/markets/stocks/articles/elon-musks-spacex-could-fast-180121306.html https://finance.yahoo.com/markets/stocks/articles/elon-musks...
      - andsoitis 5mo ago
        Markets can and do change rules from time to time. This rule change would apply to any new listing, not just SpaceX.
        tony69 5mo ago
        Yes, but it was done for spacex and it’s crooked
        andsoitis 5mo ago
        Why is it crooked? Do you understand why the rules are being changed?
        tony69 5mo ago
        I’m not sure what the justification is, but I assume it’s some flavor of “so index fund holders don’t miss out on returns”. It’s crooked because index inclusion drives massive flows at any price. SpaceX understands this and with so much money on the table probably exerted influence (maybe the big AI players contributed too). Passive funds don’t care about price (quite the opposite, they reward higher market caps in a feedback loop). But with an IPO, you’re supposed to let the market have some time to find the right price. Not to mention the changes related to profitability rules etc.
        whall6 5mo ago
        Agree with this sentiment. However, I think the S&P 500 fudged the rule to 6 months which I believe adequately straddles the line between 1. provides time for price discovery and 2. includes a large piece of the market that would otherwise be included if not for the seasoning cutoff. Agree with you entirely with respect to other indexes including earlier than 6 months.
s1artibartfast 5mo ago
yes, if it sells them on the market. The last time meta sold stock on the market was a primary stock offering in December 2013, roughly a year and a half after its initial public offering (IPO). I find it crazy that so many people misunderstand this basic fact about how the market works.
- bruce511 5mo ago
  100% correct, but I'll add that companies do use shares in other ways which also matter. For example shares can be used for buying labor. Either as options or as grants, bonuses etc. It ultimately winds up in the public shares pool, but the first recipient receives it in place if company cash. The second major use is in acquisitions. Buying other businesses using stock instead of cash is a useful tool often wielded. Again, not released onto the open market, but winds up there eventually. Plus you can use them as loan collateral, balance-sheet improves and so on. So their price matters and their value to the business extends far beyond the IPO.
BurningFrog 5mo ago
Companies buy back shares as a different way than dividends to enrich their shareholders.
- whall6 5mo ago
  Exactly: enrich shareholders at the expense of their own coffers.
  - andsoitis 5mo ago
    > enrich shareholders at the expense of their own coffers. This makes no sense. The coffers belong to the shareholders.
    - whall6 5mo ago
      “belong” is a flexible word. You’re right in theory but depending on the situation money in your bank account is worth more to you than an equivalent amount of money in a company’s bank account (of which you are a shareholder).
  - BurningFrog 5mo ago
    Just like dividends.
- tony69 5mo ago
  In big tech’s case it’s mostly to offset massive stock compensation of executives and insiders

Well, when the company issues shares, then the money goes into their account, right?

whall6 5mo ago

Meta was a $26 Bn net purchaser (opposite of issuer)

cheschire 5mo ago
Buying back shares it sold at a lower price, right? The lifecycle of a share starts with the transfer of money to a company in exchange for a share. It ends with a buy back, ideally at a higher price. But still, at the beginning it is a transfer into the company’s coffers.
- whall6 5mo ago
  The life cycle of a share starts at IPO. The S&P 500 does not add companies to its index until at least 12 months after IPO. Also, Meta issued 180 MM new shares at $38/share at IPO. That’s ~$7 Bn. Which is less than 1/4th of what they repurchased just last year. Between share repurchases and dividends, S&P 500 companies are putting money into the markets, not pulling it out.
  - PNewling 5mo ago
    > The S&P 500 does not add companies to its index until at least 12 months after IPO. Unless you're SpaceX [0], then the rules have exceptions... [0] https://finance.yahoo.com/markets/stocks/articles/elon-musks-spacex-could-fast-180121306.html https://finance.yahoo.com/markets/stocks/articles/elon-musks...
    - andsoitis 5mo ago
      Markets can and do change rules from time to time. This rule change would apply to any new listing, not just SpaceX.
      - tony69 5mo ago
        Yes, but it was done for spacex and it’s crooked
        andsoitis 5mo ago
        Why is it crooked? Do you understand why the rules are being changed?
        tony69 5mo ago
        I’m not sure what the justification is, but I assume it’s some flavor of “so index fund holders don’t miss out on returns”. It’s crooked because index inclusion drives massive flows at any price. SpaceX understands this and with so much money on the table probably exerted influence (maybe the big AI players contributed too). Passive funds don’t care about price (quite the opposite, they reward higher market caps in a feedback loop). But with an IPO, you’re supposed to let the market have some time to find the right price. Not to mention the changes related to profitability rules etc.
        whall6 5mo ago
        Agree with this sentiment. However, I think the S&P 500 fudged the rule to 6 months which I believe adequately straddles the line between 1. provides time for price discovery and 2. includes a large piece of the market that would otherwise be included if not for the seasoning cutoff. Agree with you entirely with respect to other indexes including earlier than 6 months.

s1artibartfast 5mo ago

yes, if it sells them on the market. The last time meta sold stock on the market was a primary stock offering in December 2013, roughly a year and a half after its initial public offering (IPO). I find it crazy that so many people misunderstand this basic fact about how the market works.

bruce511 5mo ago
100% correct, but I'll add that companies do use shares in other ways which also matter. For example shares can be used for buying labor. Either as options or as grants, bonuses etc. It ultimately winds up in the public shares pool, but the first recipient receives it in place if company cash. The second major use is in acquisitions. Buying other businesses using stock instead of cash is a useful tool often wielded. Again, not released onto the open market, but winds up there eventually. Plus you can use them as loan collateral, balance-sheet improves and so on. So their price matters and their value to the business extends far beyond the IPO.

BurningFrog 5mo ago

Companies buy back shares as a different way than dividends to enrich their shareholders.

whall6 5mo ago
Exactly: enrich shareholders at the expense of their own coffers.
- andsoitis 5mo ago
  > enrich shareholders at the expense of their own coffers. This makes no sense. The coffers belong to the shareholders.
  - whall6 5mo ago
    “belong” is a flexible word. You’re right in theory but depending on the situation money in your bank account is worth more to you than an equivalent amount of money in a company’s bank account (of which you are a shareholder).
- BurningFrog 5mo ago
  Just like dividends.
tony69 5mo ago
In big tech’s case it’s mostly to offset massive stock compensation of executives and insiders