Confirmed: Walmart buys Jet.com for $3B in cash • Hacker News Board

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#21

Post by abakker » Mon, Aug 08, 2016, 2:33 PM UTC

mikeyjkk wrote: post #3

In cash? Really?

bad yield on cash right now. Interest rates are low, so buying a company with greater ROE than near-zero interest rates is probably good. Unlike many big tech companies, Walmart also has plenty of debt already, their June filing indicated ~$39.4 billion in long-term debt, so adding to that is less appealing than just paying cash. Note: they could do what MSFT did with linkedin and later change their mind and issue debt, since it is very inexpensive to borrow, and Walmart has a good credit rating.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#22

Post by voidlogic » Mon, Aug 08, 2016, 2:33 PM UTC

dclowd9901 wrote: post #14

WhitneyLand wrote: post #12

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor. I must have been very wrong. I don't see how Jet justifies 3B from Walmart. I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

I see this as Wal-Mart buying their place into the online market. It's hard for a company like that to be able to spin up an entire division, and do it right. A cynical person might also believe Jet created itself to be sold off in this very way, too.

Walmart has been rapidly growing their eCommerce operation for several years, the only difference in the past this has been done via multiple smaller acquisitions per year, rather than by huge ones.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#23

Post by djb_hackernews » Mon, Aug 08, 2016, 2:35 PM UTC

a_small_island wrote: post #8

What's the likely scenarios for an employee whose been there for 2 years, an employee whose been there for 1 year, and an employee whose been there for 6 months? If we assume 1 year cliff on options.

There was an article where the cofounder mentions everyone gets the same lump of stock depending on pay grade. He also mentions it helps incentivize people to work nights and weekends so based on his unrealistic expectations of work life balance and giving out stock based on "lumps" I can come to my own conclusions.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#24

Post by blackaspen » Mon, Aug 08, 2016, 2:37 PM UTC

Based on how Walmart's eCommerce has failed to grow I think this is a waste of $3B. Hopefully the Jet employees get a nice payday out of it.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#25

Post by mattmaroon » Mon, Aug 08, 2016, 2:38 PM UTC

dubcanada wrote: post #4

mikeyjkk wrote: post #3

In cash? Really?

Walmart has money, am I missing something or is there a reason they would not want cash?

In startupland, one typically buys another with stock because they don't have much cash and their stock is arguably overvalued. In real business-land, cash is pretty common.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#26

Post by mabramo » Mon, Aug 08, 2016, 2:39 PM UTC

They came to my university to recruit last spring. I bet whoever got that job feels real good right now.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#27

Post by steego » Mon, Aug 08, 2016, 2:39 PM UTC

WhitneyLand wrote: post #12

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor. I must have been very wrong. I don't see how Jet justifies 3B from Walmart. I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

My wife does. She's probably ordered from them between 10-20 times. I mentioned them to her and she uses them now and then when she realizes Amazon is overcharging for something.

Clearly she's mostly loyal to Amazon.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#28

Post by plandis » Mon, Aug 08, 2016, 2:40 PM UTC

This is interesting. I always assumed that Jet was operating at a loss for a significant amount of their stock due to shipping costs.

I wonder if Walmart's more physical presence can help with this?

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#29

Post by rdlecler1 » Mon, Aug 08, 2016, 2:42 PM UTC

I get why Walmart would buy them, but it seems to me they could have waited 6-12 months and bought the company for $300m. There's just no way they were showing growth. The only thing that makes sense is that Jet would have been damaged goods in 12 months and this was the only option for Walmart to build a millennial friendly competitor to Amazon.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#30

Post by asmithmd1 » Mon, Aug 08, 2016, 2:43 PM UTC

tommynicholas wrote: post #16

asmithmd1 wrote: post #11

Earlier quoted context omitted.

The common stock might be worthless if the last money in had a 2x or greater liquidation preference. https://en.wikipedia.org/wiki/Liquidation_preference

It would have to be much more than 2x - 2x would still have no impact because the acquisition was 2x the price of the last round.

You are right.

I took a quick look at the cap table on CrunchBase and there is lots of smart money in it. It is definitely a win for the investors but how much of a win for common share holders is up to how hard the CEO fights for them.