6 ms·

How is it legal to have different share classes? You could make 100 shares that can vote and then sell 99.9% of the company while maintaining full control. Seem

How is it legal to have different share classes? You could make 100 shares that can vote and then sell 99.9% of the company while maintaining full control. Seems strongly against the spirit of a publicly traded company

LearnYouALisp 3mo ago
Who has the gold makes the rules
andruby 3mo ago
Most large companies do that these days: GOOG, META all have different share classes. Even the small startup I worked for had that.
- interestpiqued 3mo ago
  I mean that just begs the question how we got to this point. And how far detached is the public market from real value. Many shares don’t confer actual value. Hell a lot of these companies don’t pay dividends in addition to very little or no voting rights.
  - munk-a 3mo ago
    Dividends are an interesting topic. There are sort of two ways to view the stock market - one is as a loan with a very drawn out repayment schedule that may be amicably adjusted for the health of the company (that one relies on two repayment strategies, dividends, buybacks and acquisitions). Once a company has issued stock the only two real reasons to care about the value is for the utility as a valuation tool which has steeply fallen off with indepth audits becoming the norm and, of course, further stock issuance - a healthy share price allows less dilution for further issuance. The other view of the stock market is just pure gambling - if you take away the disbursements and shareholder voting control then all that's left is the valuation which we can do better in different ways (and stock price is often disregarded when considering loans and M&A except when the difference can be arbitraged). Really, it's kind of all meaningless BS, but as long as most people believe it isn't then it's a great way to grow assets by doing nothing which is an activity that we apparently want to encourage?
    - interestpiqued 3mo ago
      I wouldn’t see it as just pure gambling. I’m not a dividend queen that really cares all That much about it. I do think we are sliding along the scale from shares having intrinsic value as an ownership stake in an income producing asset to collector cards that we track societies valuation of a company with. And at some point in the next 50 years shit will hit the fan. Unfortunately sitting it out isn’t really an option either
skissane 3mo ago
Musk didn’t invent the idea of using multiple share classes to ensure the founder(s) retain control of the company, see Rupert Murdoch, Google, Facebook, etc From the regulators’ perspective: it is a risk, but you disclosed that risk in the prospectus that buyers are assumed to have read (what percentage ever actually do?), hence it is fine Well, when you buy into an IPO, they make you sign to say you read it. So either you did, or you made a false statement on a legal document
Kirby64 3mo ago
There's some companies (Snap being one of them) where certain classes of shares have NO voting rights. If you think SpaceX is lopsided, look at Snap's shares. They have A, B, and C class. The founders of Snap own 95% of the voting through their Class C shares... literally only pre-IPO folks have any voting rights.

LearnYouALisp 3mo ago

Who has the gold makes the rules

andruby 3mo ago

Most large companies do that these days: GOOG, META all have different share classes. Even the small startup I worked for had that.

interestpiqued 3mo ago
I mean that just begs the question how we got to this point. And how far detached is the public market from real value. Many shares don’t confer actual value. Hell a lot of these companies don’t pay dividends in addition to very little or no voting rights.
- munk-a 3mo ago
  Dividends are an interesting topic. There are sort of two ways to view the stock market - one is as a loan with a very drawn out repayment schedule that may be amicably adjusted for the health of the company (that one relies on two repayment strategies, dividends, buybacks and acquisitions). Once a company has issued stock the only two real reasons to care about the value is for the utility as a valuation tool which has steeply fallen off with indepth audits becoming the norm and, of course, further stock issuance - a healthy share price allows less dilution for further issuance. The other view of the stock market is just pure gambling - if you take away the disbursements and shareholder voting control then all that's left is the valuation which we can do better in different ways (and stock price is often disregarded when considering loans and M&A except when the difference can be arbitraged). Really, it's kind of all meaningless BS, but as long as most people believe it isn't then it's a great way to grow assets by doing nothing which is an activity that we apparently want to encourage?
  - interestpiqued 3mo ago
    I wouldn’t see it as just pure gambling. I’m not a dividend queen that really cares all That much about it. I do think we are sliding along the scale from shares having intrinsic value as an ownership stake in an income producing asset to collector cards that we track societies valuation of a company with. And at some point in the next 50 years shit will hit the fan. Unfortunately sitting it out isn’t really an option either

skissane 3mo ago

Musk didn’t invent the idea of using multiple share classes to ensure the founder(s) retain control of the company, see Rupert Murdoch, Google, Facebook, etc From the regulators’ perspective: it is a risk, but you disclosed that risk in the prospectus that buyers are assumed to have read (what percentage ever actually do?), hence it is fine Well, when you buy into an IPO, they make you sign to say you read it. So either you did, or you made a false statement on a legal document

Kirby64 3mo ago

There's some companies (Snap being one of them) where certain classes of shares have NO voting rights. If you think SpaceX is lopsided, look at Snap's shares. They have A, B, and C class. The founders of Snap own 95% of the voting through their Class C shares... literally only pre-IPO folks have any voting rights.