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Google splits into GOOG and GOOGL today

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Re: Google splits into GOOG and GOOGL today

#91

Post by alandarev »

eitland wrote: post #82
nyrina wrote: post #81

Earlier quoted context omitted.

It could certainly be a large factor in the massive price. $19B is a whole lot of money, even (especially?) for a company the size of WhatsApp

Interestingly the size of WhatsApp (the team and the required hardware) compared to its userbase might actually be one of the reasons why the price went so high. In other words, - they had a very good engineer to end user ratio.

Oh please, the companies are being bought out not because of some engineering masterpiece, but for already checked and working idea + loyal userbase.

Re: Google splits into GOOG and GOOGL today

#92

Post by repsilat »

JumpCrisscross wrote: post #67
fiatmoney wrote: post #18

"Ownership" without control gives you precisely nothing, except for perhaps standing in a shareholder lawsuit. A company being unaccountable to its investors should make it unattractive as an investment.

> "Ownership" without control gives you precisely nothing This statement implies non-voting stock is worthless. That is untrue. There are people willing to pay good money for nonvoting stock. Imagine a dual-class share company. Class B shares cannot vote. Class A shares can vote - they own 100% of the vote share. But both classes are pari passu in economic terms - if Class A gets a $1 dividend Class B must receive th…

> Would you believe those 999,999 non-voting shares are worthless?

If the owner of the company had shown no indication of ever wanting to pay a dividend, and if there was no reason to assume the company would ever be liquidated, then yeah -- there is no reason for those shares to have any non-zero value. Future cash flows are only relevant insofar as shareholders can receive or influence them.

If those 99999 shares have any value it's because they're the official baseball cards of the company, and baseball cards' values increase when the player on the front performs well.

Re: Google splits into GOOG and GOOGL today

#94

Post by repsilat »

naftaliharris wrote: post #29
wtracy wrote: post #3

Does this imply that GOOG and GOOGL shares will have prices that will move independently going forward? This should be interesting to watch.

Yeah, the first thing I thought about when I heard this is that these two shares would be ideal for pairs trading! (Though presumably this will be arbitraged away quickly).

> Though presumably this will be arbitraged away quickly

Only if the market believes they have the same fundamental value.

Edit: well, if differences in price stabilise then you might "arb" unequal price movements away, but it's still risky. The best you can probably do is bet generally on corellated movements, not fine-grained one-to-one matching.

Re: Google splits into GOOG and GOOGL today

#95

Post by nostrademons »

moe wrote: post #87
therealarmen wrote: post #26

This is meant do to one thing -- let the founders retain control while allowing for large stock acquisitions. It's possible Google was muscled out of the Whatsapp deal simply because they couldn't pony up the money. $20B is almost half of their cash on hand. Note that the Nest and Waze acquisitions (small in comparison) were paid for almost entirely in cash.

Muscled? I mean... not to rain on anyone's parade. Perhaps someone just came to their senses? 19 billion dollars, for a messenger app, is more than just a little bit ridiculous. It's the kind of ridiculous that will be a runner-up in wikipedia for most idiotic business move ever.

People thought the same about YouTube, but that turned out to be a brilliant (and very profitable) move.

Then again, they also thought the same about AOL/TimeWarner, and they were absolutely right then.

It's usually pretty futile to try to predict the future. I can see Zuck's reasoning with the Whatsapp purchase, though, and I don't think he's insane. He and Larry probably understand the structure of the tech industry a lot better than most people.

Re: Google splits into GOOG and GOOGL today

#96

Post by enneff »

nostrademons wrote: post #95
moe wrote: post #87

Earlier quoted context omitted.

Muscled? I mean... not to rain on anyone's parade. Perhaps someone just came to their senses? 19 billion dollars, for a messenger app, is more than just a little bit ridiculous. It's the kind of ridiculous that will be a runner-up in wikipedia for most idiotic business move ever.

People thought the same about YouTube, but that turned out to be a brilliant (and very profitable) move. Then again, they also thought the same about AOL/TimeWarner, and they were absolutely right then. It's usually pretty futile to try to predict the future. I can see Zuck's reasoning with the Whatsapp purchase, though, and I don't think he's insane. He and Larry probably understand the structure of the tech industr…

The way I see it: Facebook's edge is its social graph. WhataApp had independently built a massive social graph, just like Instagram did. Facebook simply cannot afford to not acquire these companies.

Re: Google splits into GOOG and GOOGL today

#98

Post by fractalsea »

nostrademons wrote: post #95
moe wrote: post #87

Earlier quoted context omitted.

Muscled? I mean... not to rain on anyone's parade. Perhaps someone just came to their senses? 19 billion dollars, for a messenger app, is more than just a little bit ridiculous. It's the kind of ridiculous that will be a runner-up in wikipedia for most idiotic business move ever.

People thought the same about YouTube, but that turned out to be a brilliant (and very profitable) move. Then again, they also thought the same about AOL/TimeWarner, and they were absolutely right then. It's usually pretty futile to try to predict the future. I can see Zuck's reasoning with the Whatsapp purchase, though, and I don't think he's insane. He and Larry probably understand the structure of the tech industr…

YT was bought for $1.65bn in shares which is an order of magnitude less.

Re: Google splits into GOOG and GOOGL today

#99

Post by adventured »

herokusaki wrote: post #97

Slightly off-topic but why don't more companies have 5 character ticker symbols? They'd probably be easier to recognize.

Until the late 1990's there were SEC rules governing when you could have three vs four or five letters.

You might not be surprised that the origination of the short naming convention was heavily caused by the ticker tape machine (dramatically more convenient in most respects to just enter a short symbol rather than the whole company name).

Re: Google splits into GOOG and GOOGL today

#100

Post by nostrademons »

ericd wrote: post #80
donaldc wrote: post #77

Earlier quoted context omitted.

Says the study I cited, which compared historical shareholder returns for companies with stock voting arrangements like Google's to companies having one class of stock that each has one vote.

I skimmed it, it seems a bit suspect, holding up as evidence that four relatively recent tech IPOs have dropped since their debut, and the original research was conducted by what sounds like a shareholder advocacy group. Zynga, Facebook, and Groupon didn't drop because of the share structure, and it's disingenuous to suggest that that was a probable reason. I've seen the damage that focus on short term share price wr…

The study itself looked at 114 companies in the S&P 1500 (not a typo). The majority of them were consumer discretionary and industrials, not tech.

One thing the study didn't make clear was what its control was. It seemed like they were measuring returns relative to the S&P 1500 as a whole, but this introduces a lot of conflating factors. The study also found that controlled companies with a single-class structure (eg. WalMart, where there's only a single class of shares but the Walton family owns >50% of them) performed better than both multi-class and non-controlled companies, across all time periods. I can't see any rational reason other than random chance that this would be the case, and I would be skeptical of any study with a sample size of 114 non-randomly-chosen entities.

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