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Mark Zuckerberg Signed the Wrong Document

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Re: Mark Zuckerberg Signed the Wrong Document

#41

Post by gefh »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

A firesale, or buyout, or merger, or nationalization. It's strange, because few of those terminal events will get you a very high valuation, yet this doesn't seem to have a depressing effect on current values. But if no-one thinks too much about it, there is still plenty of liquidity, and that's really all the evidence the liquidity providers need.

Re: Mark Zuckerberg Signed the Wrong Document

#42

Post by Ankaios »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

Any sale—not necessarily a fire sale.

Re: Mark Zuckerberg Signed the Wrong Document

#43

Post by iabacu »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

There's usually a provision on super-voting shares that automatically convert them to common shares upon transfer.

So, in an event where Mark passes away, decides to sell, etc, then the rest of the shares will have more voting power, relatively.

Re: Mark Zuckerberg Signed the Wrong Document

#44

Post by TearsInTheRain »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

Dividends are definitely the primary way of rewarding shareholders but another way a company can reward its shareholders is by doing a buyback. Owning a share gives you ownership over a portion of a companies profits so it is very tangible even if it only exists for you on paper for the time being.

Re: Mark Zuckerberg Signed the Wrong Document

#45

Post by jegutman »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

The structure of the company gives you the right to future dividends at the same rate as other classes of stock. So as long as they think they're creating something of value and the marketplace does you own an equal equity share of that entity.

Google finally paid a dividend (although a one-time dividend) and also announced a stock buyback so these companies may start returning capital. As of right now facebook thinks that capital is best put to use inside the company. I think there's a pretty good chance they're right on that.

Bottom line, you have the same rights to payments per share as Zuckerberg. Also technically Zuckerberg will at some point (might be 30-50 years from now) start divesting his shares and at some point your stock might be valuable for someone who does want to change the structure of the company or take it private.

Another defense is "internal arbitrage". So the company has value, and a different owner might decide to sell off assets or pay dividends to realize that value. But even without the stock changing hands, let's say it started trading at $20 a share. This would encourage Zuckerberg to work with a PE firm to take the company private again.

When stocks trade near, at, or above fair value you wont' really see any of these things happen, but if they started trading way below fair value, you would.

Re: Mark Zuckerberg Signed the Wrong Document

#46

Post by Dwolb »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

In short, yes. It's your claim to the assets less liabilities of the company. Since Google is trading at around 30x equity, the value equity holders get in case of a sale would be about 1/30th of their market cap. I didn't look at their 10k, but debtors would have claim on any assets before equity.

If you're an investor in Google, you're betting either someone will buy the stock higher from you in the future or they will eventually pay dividends when growth slows.

Here's a discussion on an internet forum on the topic [1].

[1]http://money.stackexchange.com/questions/51976/if-a-stock-do...

Re: Mark Zuckerberg Signed the Wrong Document

#47

Post by morgante »

krapp wrote: post #15
late2part wrote: post #10

The directors only get $300k per year for serving on the BOD of Facebook? They are worth more than that!

Not to be trite, but if they were worth more, they would be paid more.

Not necessarily. A large portion (indeed, probably a majority) of the benefit from serving on Facebook's board comes in non-pecuniary compensation.

Everyone on Facebook's board is already quite wealthy and is not serving on the board for the purpose of getting a salary.

Re: Mark Zuckerberg Signed the Wrong Document

#48

Post by Retra »

jliptzin wrote: post #16
meeper16 wrote: post #8

Earlier quoted context omitted.

1. facebook did not "invent" anything, especially compared to Google, they copied text entry boxes and messaging, which anybody could easily duplicate from myspace and reworked the design. Google invented something.

Google's products make you more efficient. Facebook's products make you less efficient.

Efficient at what?

Re: Mark Zuckerberg Signed the Wrong Document

#50

Post by jandrese »

sopooneo wrote: post #28

If a share barely gives you voting rights, and the company does not, and does in the foreseeable future plan to, issue dividends, then what is the inherent value of the stock? Is it just my portion of the proceeds in case of a firesale?

I would assume some people are holding them for purely speculative reasons--planning to sell when the price goes up.
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