Comment by georgeburdell
1 day ago
With the serious lapses in governance being made by founders with these special shares, such as Musk and Zuckerberg, I wonder if the shares without these special rights will be substantially discounted. What rights do these other shareholders retain that would keep them valuable? Rights to compensation in the case of bankruptcy?
Facebook would never have become what it is today if Zuck had lost control of the voting. It would have been sold 10 times over and prob not exist today. I suspect the same could be said for Mask and his businesses.
Facebook IPOd in 2012, after it was already used by hundreds of millions of people, and after it bought Instagram
When FB was private Zuck had 57% of class B voting right stock. He retained this on IPO. My point is, if he did not have control over voting, before/after IPO, FB/Meta would not be where it is today. He prevented Ads being on FB for many years operating at a loss to grow FB while shareholders complained wanting to shove Ads all over the place.
Or maybe Facebook would still be a valuable destination and instagram still a great product for sharing photos instead of god knows what Zuckerberg has done to them now.
instagram being a cheap tiktok clone is frankly an insult.
You’re saying this as if that wouldn’t have been a positive outcome
The outcome would have been like phones were before the iPhone. NFL installed on every device.
“What it is today”.
Oh, glad we managed to not miss out on the 2-sided ai slop panopticon
These have become some of the most valuable companies on Earth. The idea that there are lapses in governance in these companies is insane. Any shareholder is buying in fully aware of the governance structure. Many because of it! Shareholders’ rights are clearly enumerated.
I agree many buy because of the governance structure and founders retaining control, but there is a lot of dumb money out there.
From Claude via stockanalysis.com: META — institutions 67.51%, insiders 13.49%, float 2.19B of 2.54B shares outstanding. That leaves roughly 19% as retail/other.
SPCX — institutions 5.95%, insiders 46.47%, float only 638.65M of 13.17B shares. Residual is ~47.6%, but that is not retail.
The value of the company and lapses in governance have nothing to do with each other. One does not disprove the other
The typical "investor" is an ETF these days.
Your standard SPY or VTI investor doesn't know jack diddly squat about shareholder rights, nor do they ever plan to invoke them.
Willful ignorance is not an excuse. If you buy into an ETF, you are delegating responsibility to the people who run the ETF (or the people who maintain the index that the ETF tracks), and you've decided you're ok with that, and are ok with whatever companies are in the index/ETF.
You can always decide to pick an ETF that doesn't invest in the companies you don't like, or invest in individual stocks if you have the time and stomach for it.
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you should have a look at proxy firms. you would be surprised
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> Any shareholder is buying in fully aware of the governance structure.
This is laughable. Many shareholders don’t even know they own stock in these companies.
That’s an indictment on them. You should know where you’re putting your money and why. If you delegate this to a professional or influencer, you do not get to blame them. After all, you could just buy something you think you understand better like real estate or keep it in cash.
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In the case of Spacex that's literally not the case, when private investors bought shares the company was already a decade old and had a single class of shares. It's only since the IPO that the company switched to a dual structure, multiple years after private investors bought in. And class-B shares have only been given to Elon and a few of his friends.
The private investors were free to sue or arbitrage, as it is a private matter.
There were disputes around SpaceX secondary market/special purpose vehicle shares before the listing, but they were all settled out of court, AFAIK.
SpaceX has had multiple share classes the entire time, what are you talking about? pre-IPO there was a third Class C with no voting rights at all, these got converted to Class A
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Generally the 10x shares aren't traded so it's impossible to see if they trade at a premium.
One exception is GOOG / GOOGL which both trade actively, and there's not much difference in price.
The mechanism for a price divergence could be accumulation of the 10x shares to seize control, but even if you could buy the entire float, it wouldn't be enough to take control, so that mechanism never happens.
There are three classes of Google stock.
By voting rights, they have 10x (founder stock), 1x (trading as GOOGL), and 0x (trading as GOOG). The class with 10x voting rights does not trade publicly. The class with 1x voting rights does not have enough voting power to control the direction of the company so there is no real difference in perceived value between GOOG and GOOGL.
Employee stock awards are IIRC all in restricted shares of GOOG (0x voting rights) so they don't dilute the power of the founders.
You are correct.
Interestingly, the 10x shares held by Brin and Page constitute only 11% of the economic value of Alphabet, but 51% of the voting control.
And the 10x shares automatically convert to 1x shares upon transfer or inheritance, so if the founders cash out or die, the 10x supervoting power disappears.
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> I wonder if the shares without these special rights will be substantially discounted
it should be, but the market might be a bit irrational.
No rights to compensation on bankruptcy. Payroll is first, then debt, taxes and stuff. Equity holders ride down to zero.
zuck for all his fault - he ain't a scammer or wannabe scammer.
he might have a large miss with the metaverse, & maybe current a.i effort. but in terms of being ruthless with competition & acquiring competition he did his job well as CEO.
musky on the other hand - overpromising and underdelivering.
There sure is a lot of that with Musk, but there’s also a lot more “delivering” than most companies ever achieve.
At this point it’s not over promising, he’s knowingly lying to investors