Earlier quoted context omitted.
Stock based compensation is reported as an expense in income statements, so, you're wrong.
This is why I said ignorant shareholders.
As opposed to the use of multiple share classes with different voting rights?
Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
111–120 of 163 posts
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#112Earlier quoted context omitted.
This exactly. I work at Google and it astonishes me how surprised people are when I tell them I use autosale, the company program where your stocks are sold immediately as they vest. They always ask "Don't you think Google stock is going to go up?" And I always reply that yes I do think it will go up but 1) that's not the right question to ask, you should ask whether it will go up more/less than anything else you cou…
Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling older stock first?
It is taxed as income regardless at the point of vesting.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#113Earlier quoted context omitted.
If you feel your company will do better than an average company based on knowing the employees and strongly believing in its roadmap, culture and ability to innovate, it isn’t irrational to accumulate stock in it.
It's irrational to believe that you're more likely to be correct in that assessment than any other person who makes a bet on a specific stock.
No, it is not. This is one of the few times you are actually allowed to trade based on insider information.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#114Earlier quoted context omitted.
Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling older stock first?
It is taxed as income regardless at the point of vesting.
I think the op was saying that you already owned the stock - that now becomes worth 1,000,000 and presumably would have paid income tax for the FY when you vested.
You surly don't pay income tax on the gain of already owned stock but CGT.
Back in the day 2000's I did own stock that was worth over 1,000,000 certainly wouldn't have had to have paid income tax if we had been bought out at point - but that was in the UK
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#115Earlier quoted context omitted.
Self driving cars have massive network effects, just like any product dependent on machine learning. More users -> more data -> better product -> more users. It's the same reason Google is invulnerable in web search.
Google isn't invulnerable in search because of a network effect, which is about your product becoming more valuable because you connect your users to your users (e.g., the Bell System or Facebook). Google is invulnerable in search because search has a very long tail, requiring massive investment to reach adequacy for most users. Google's advantage is economy of scale . Self-driving cars definitely don't have a networ…
The network effect for google comes from it's relationships with users and advertizers. This is why Microsoft couldn't overtake them despite spending so much on bing.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#116Earlier quoted context omitted.
This exactly. I work at Google and it astonishes me how surprised people are when I tell them I use autosale, the company program where your stocks are sold immediately as they vest. They always ask "Don't you think Google stock is going to go up?" And I always reply that yes I do think it will go up but 1) that's not the right question to ask, you should ask whether it will go up more/less than anything else you cou…
Would you not want to sell stock you have held for some time to take advantage of lower capital gains - or do the US tax authorities assume you are selling older stock first?
RSUs are taxed as income when both vested and released (generally simultaneous). From then forward, gains are capital gains from a basis of the value that was taxed as income.
With respect to lot identification (what shares did you actually sell for tax purposes), within an account, most brokers will let you elect specific lots or FIFO and I believe the IRS allows you to elect average basis. (There’s no particular advantage to making that election, IMO, so I never looked into it but vaguely recall that being the case.)
Across accounts, except for wash sale treatment, the IRS does not assume that when you sold in account B that you were selling shares acquired in account A.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#117Earlier quoted context omitted.
If you are capable of correctly estimating that, you are likely better off running a hedge fund than working at Google.
Not really. Employees can have much more information and market insight than an external analyst, especially in tech.
Yes, but what you need to be able to predict is how the market is going to value your stock in $N years.
Knowing that you have cool tech coming down the line, or that your colleagues are way smarter than your competitors', etc, might give you inside that analysts lack, but it rarely qualifies you to predict how the stock is going to perform - particularly in a large enough company where the pieces you see are small picture relative to the overall performance of the company.
It's also easy to get blinkered, and deceive yourself into thinking that the company will be successful despite the warning signs that those outside the company might see.
I worked at a bank during the GFC. And it was easy to believe (perhaps correctly, but that's irrelevant) that we weren't really in that much trouble. We were solvent, we were diversified, we weren't exposed to sub-prime, etc. But the market took a beating to us. And it didn't feel like that was justified. But that simply didn't matter. The stock was in free fall, and even if we were right and the market was "wrong", the market is always right because that's what sets the value. If you could afford to take a long term view, then the price recovered, and it wasn't the end of the world (though there were definitely better performing investment options). But I had colleagues who were leveraged against company stock and were getting margin calls every second day.
Which brings me to my second reason for hating to hold stock in my employer - those colleagues couldn't sell their stock due to insider trading rules. They had to find the money for the margin call, because the fact that they had "much more information and market insight" (as you put it) actually meant they weren't allowed to sell. Holding (public) stock in your employer is a big risk because even if you see the price crumbling, you may not be able to get out, and you just have to take the hit.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#118Earlier quoted context omitted.
So? A rising tide lifts all boats.
You don't buy these companies to catch a temporary rising tide. Market timing is more often financial suicide, one of the worst mistakes amateur investors make. You buy for the growth and long-term picture. If you believe in the growth potential, you buy in at an early opportunity. ServiceNow's stock has gone up six fold in less than six years. Their revenue has climbed from $424m in 2013, to $1.93b in 2017. The last…
Let’s not forgot Apple’s rise, fall, and post 2000 rise again. If you were young in the 80s, bought Apple, and planned to save it for retirement you would be sitting on a nice chunk right about now.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#119Earlier quoted context omitted.
This is why I said ignorant shareholders.
As opposed to the use of multiple share classes with different voting rights?
Well yes another con of the shareholders. Why shareholders invest in companies doing this sort of stuff is beyond me. It is not as though they are they actual owners of the business or anything.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#120Earlier quoted context omitted.
The real question is why a company like Google is still giving stock to employees. The whole thing is a con at the expense of ignorant shareholders who somehow think all this dilution is not coming out of their pocket.
No its part of the employees comp - you seem to have a very 19th century Dickensian view of employees.
Not at all. I just think the employees should be paid in cash and not in shares as a way to hide the total compensation cost.