My rationale:
Shareholders have been diluted by 73 million new shares. Yet stock goes up. => No cost for MS/shareholders.
The total market cap has gained $7B, so it's been "free" for owners/shareholders.
Market agrees with GitHub valuation: Seehttps://mobile.twitter.com/Ministraitor/status/1003956663777419264 …
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এই থ্রেডটি দেখান
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I'm not strong on markets and finance, so my rationale might be totally wrong here. Please correct me, if that's the case
এই থ্রেডটি দেখান
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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With respect: that's a fun thing to say -- unfortunately it's not true for a number of reasons... - At least half of the move was broadly market related; - Microsoft doesn't own that stock; - Existing shareholders are diluted; - The stock price will move down, too; - Etc.
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I'm not commenting on whether it was a good buy or not, just on your logic w/r/t it being "free". By that logic, if MSFT market cap loses $10b tomorrow, then that means the acquisition cost them $3B more than they paid? Doesn't make sense.
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I clarified my rationale here: https://twitter.com/auchenberg/status/1004046329306230784 … It was "free" for investors in the sense if the market gains yesterday holds with the new dilution, but of-course I can't predict the future, and the tweet shall be read as "snapshot" put on the edge. I'm way-off?
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It's "free" in the sense that companies with a float that massive can essentially print money. But the stock will go down, and once you drill into the numbers it's not literally free.
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Sounds about right.
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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… if Microsoft would own all of their own stock ;)
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My math might be completely wrong here, but shareholders have been diluted with the new stock issue, and yet the stock gained about 1% => Almost free
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It's about even value. The stock would be expected to increase to include the value of GitHub. It doesn't mean it's free, it means if anything the market accepts Microsoft's price for GitHub as about right.
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This seems like the correct assessment to me - it’s like GitHub went public at that value then merged with MSFT. Unless I’m being totally stupid.
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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If the company owned all their own stock, yes. If you think about it, for 7.5b, github undersold. If users leave en masse, then github was overpriced. M$ could afford to "shelve" github and kill it, anyways. Interesting to see what will happen!
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@F4R4D4Y1@auchenberg I don't think they bought it kill it. I think they bought it to save it. GitHub was hemorrhaging what little money they had. That being said, MS is publicly traded. If things get tight they could dump it. See: HP vis a vis everything. -
You said "HP" and I barf't a little
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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MS is valued at X so value per share = X/shares. Acquires GH so MS value += value of GH(7.5B) and thus share value = X+7.5B/shares. Issues 73m shares so share value = X+7.5B/shares+73m. If sum(share value) < X+7.5B it means MS 'overpaid' for GH by 0.5B as that value is now gone.
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And "overpaid" was in quotes because what it really means is that the market expects there to be 0.5B in costs related to the purchase of GitHub. Like when you buy a new car. You pay X but since can now at best resell it for Y so the value added to you by this purchase is Y.
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Have you already pushed that code to github?
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Hehehe. Nope.
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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Market cap isn't actual money though, right? The acquisition would only be "free" if MS itself now sells 73 million worth of stock at this inflated price.
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Sorry I mean, $7.5 billion worth of stock.
কথা-বার্তা শেষ
নতুন কথা-বার্তা -
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