Is there any reason to think the company is worth $4.7B or whatever ($9.30/share)? If so the stock is a steal at its current price and we should all buy lots. But can the market be THAT wrong?
That doesn't mean the market is wrong, it means the market thinks it will continue to be run ineffectively.
It seems like there are contradictory facts being claimed: that the price to go private is a lowball, and that the current price is accurate.
If they sell, they are selling a stake in the real company as it exists, not the alternate reality one.
Think of a more relatable example. . A rental house with crazy tenants sells for less than a vacant one.
If you buy or own a stake in a business that is controlled by poor managers, you are lucky to sell for a 20% premium.
Honestly that's borderline fraud.
They have been (miss)managing the company about the same for 18 years, so it would have to be one of the most epic cons of all time.
On the other hand, partial owners and management take companies private all the time. It is an extremely common occurrence. It and PE buyout are probably the two most common ways.
The controlling interest can just hire incompetent ops heads and side-line competent ones for a few quarters ... slowwalk any events that could increase value
The board resigning likely helps the plan
Fair chance future offers will get worse the longer it goes on
The comment further implies this is on purpose in order to buy the company cheaply.
> Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign
EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
1. Less legal oversight and paperwork.
2. I don’t know the terms of the buyout, but if this means the CEO, family, friends, etc (“insiders”) become the new shareholders, then any future upside will be distributed to insiders not the open market.
This is similar to what zuckerberg is doing with Meta. Supervoting Class A shares vs common shares, etc.
The arrangement is completely up to the governing docs of the entity.
Having less legal oversight generally refers to paperwork that needs to be done for the SEC.
voting power dictates control. Ownership dictates rights to profits. you can have full control with 51% ownership, but you still only get 51% of profits.
I don't know their governance structure, but the CEO may have a majority of votes, but not own a majority of the actual shares. Being able to take the company private would give her (and her other investors) full economic control as well as voting control.
This is risky ground, of course. Even with voting control, legally the CEO cannot screw over the minority shareholders.
Also the question of "what powers does the board even have then?"
CEO Founder has a direct conflict of interest with shareholders...
If they were to reorganize first and produce a company worth as much as its competitors, they only get eg 5% of eg 30B, which after taxes makes them maybe a billionaire. Reorg and do the same thing and they could be looking at control and $10-20B.
Where tens of billions of dollars are involved, “really complicated” and “high risk” plays are basically table stakes.
Anne Wojicki is already sufficiently wealthy – net worth $150m+? – that maybe what really interests her is playing hardball for (say) $10B+ instead of just a few hundred million more? Or for the control & glory of shepherding forward some breakthrough cancer treatments that the other investors might simply treat as financial options to sell early?
And, perhaps she's got the votes & de facto IP control & legal budget to think she's got a good chance of winning, and even a loss can't cut her out?
Isn't this just bare-knuckle "founder mode"?
Yes. Historic examples abound of the market being that wrong. People can and have made fortunes by finding those opportunities.
Which is different from is the market that wrong in this case?
Hint: regulatory crisis, Suzanne Trimbath, failure to deliver shares, naked shorting, Tesla shortsqueeze, VW shortsqueeze, UBS's and Swiss gov's 50 year secret, etc.
Shortsqueezes are cases of driving prices up because shares are hard to get and shorts need to cover. Again, not related to the best offer being too low.
Secrets are also dumb examples because that’s hidden information.
What we’re talking about here is the valuation with all of the public information available now. Nobody of any relevant market size seems to agree that it should be $9/share.
If one is willing to grant that the stock "price" for a liquid listing, is the price for a stock at any given time, then you could argue the markets are "wrong" insofar that the price quoted in the open market, is absolutely not the correct price - regardless of the excuse of a short squeeze.
This is absolutely not true of a price that’s “too low”. Anyone, including you, can go hit those asking prices and start to load up. There is also capped downsize risk (as opposed to uncontrolled risk in a short).
This is all to say that it’s possible that company could be worth $9-10/share, but based on all of the information publicly available today, there are effectively tens of thousands of people each swinging billions in capital than are parking it in stuff providing 5% return rather than the 20000% you suggest is there.
So this tells me that you are just much more hopeful for the future of the company than the current financial projections and prospects support.