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Maybe investors are mad about their shares being diluted through these stock deals?
by psbp 13y ago
Maybe investors are mad about their shares being diluted through these stock deals?
- deleted 13y ago[deleted]
- tg3 13y agoRational investors don't sell shares punitively, although if they believe that they'll continue to be diluted at a rapid pace, that could account for some of the downward valuation.
- djloche 13y agoThe old saying is: the market can stay irrational longer than you can stay solvent.
- marcosdumay 13y agoIt's not punitive, and is perfectly rational. You buy some share in a company that you think will grow a lot; you discover that this company is not well managed, so it probably won't grow that much; you sell your stock, before the non-growth is realized.
- tedsanders 13y agoRather than mad, perhaps the investors are taking it as a signal that Facebook management, by buying other companies in mostly stock deals, believes that Facebook stock is overvalued. That could be a rational rather than irrational explanation.
- vanwesson 13y agoBingo. The Oculus and WhatsApp deals have added up to billions "spent" via mostly stock instead of cash. This is almost certainly due to insistence from the Facebook execs themselves, who clearly are expecting the price of their stock to fall in the long term and are attempting to extract some value from it while the price is still high.
- danieltillett 13y agoThe real evidence for this will be if Facebook buys TimeWarner.
- psbp 13y agoI didn't mean mad literally. I meant the intent that you mentioned.
- danieltillett 13y agoThere are only two ways to look at this and neither are good for the share price. 1.Z knows what he is doing and thinks the share price is overvalued. 2. Z has no idea what he doing. Who wants to own a company with incompetent management that can't be voted out by the shareholders.
- suzerain 13y agoI think you can attribute at least some of the decline to this. Only $400mm came from cash with additional shares possibly being issued based on performance. While this alone may not be a good reason for a long investor to drop shares, if it signals something about Zuckerberg's acquisition strategy going forward, then some investors may be expecting future dilution from new acquisitions. Furthermore, structure of share classes within FB also makes Zuckerberg's whims about this sort of strategy more influential to FB's direction than it would in another company.