So rather than $8 a share they get zero? Sounds like the board was the one that messed things up.
The share was trading at $8-$9 at the time.
The primary reason why the board has been rejecting the offer is that the CEO kept proposing discount prices to the market rate.
Edit, since I hit posting limit.
To pooper:
> Since it's such a big part of the S&P500
The conclusion is based on that premise, so any other business that satisfies that premise should also lead to the same conclusion.
To llm:
> I think their point is that businesses at the top of the S&P500 are traded at sentiment and momentum based values that are pretty disconnected from a logical P/E
I have read the same about other businesses many times. There is nothing logical about only using P/E as a factor in determining price (or “worth”). No one knows the future, so even a price derived from an arbitrary standard of P/E is a “sentiment and momentum based” value.
So index membership does change the stock multiple (but not by 10x).
Also, Tesla is an idiosyncratic stock with very high volatility and very high retail participation. Things can be true of Tedla stock which do not have to be true of the median stock.
Some stocks are overpriced, and others are undervalued. The inclusion in the S&P500 alone is just 1 of the factors.
In my opinion, Apple and NVIDIA are significantly undervalued based on their fundamentals, even though they make up a gigantic % of the SPX.
It could be logical to ascribe some value to a business’s leader having access to a US president known to be “open for business”? And we know a big tax bill is likely to be passed by year’s end.
Perhaps that will lead to good fortunes for Tesla shareholders. Or maybe not.
And the thing is, I don't have to be right about Tesla because I'm not making a single bet on that company. I'm making hundreds of bets using my methodology, and it's enough that I'm right 50-something% of the time (or even less than 50%, if we're talking Options trading).
That's what the whole stock market game is about. Hence, some investment companies, like Berkshire Hathaway, consistently make more than others over the long term.
(apologies for the below crude metaphor.. but...)
I am 1.80. You can kick me in the nuts and I will fold, but I will still be 1.80 a few minutes later.
Let's see after the kick in the nuts if the price will still be $8.
When there is blood in the water the sharks start circling. And some sharks 'short'. And I know little about their operations of 23andMe, but I understand the _value_ of their data!!!!! So they may be sitting on a pile of Latinum and not be able to fully monetize it (sell it to every pharma/insurance/etc.) company on the planet.
Also, corrections aren't instant, so if the change of value was for something that had already happened, not something currently happening, the offer will reflect the expected price that the shares would settle at.
In most high-profile bankruptcies, there aren't enough assets to even finish paying creditors, yet alone creditors. However, this is a voluntary Bankruptcy, so there might actually be assets left over to pay out to shareholders.
If the value of assets after paying off debtors is > $8/share, then that’s the easiest arbitrage opportunity considering it’s currently trading at $1.80.
Just buy the whole thing for $3/share (an irrefutable premium of 67%), shut down operations entirely, pay off the creditors, and pocket the net assets of > $8/share and more than double your money almost instantly.
If the claim is the CEO ran it into the ground then the board messed up even worse by not replacing the CEO.
So I’m doubting that is what is really happening here?
There isn’t one single value, value derived ( let alone perceived) is subjective
In this case, The stock is worth more(or less) to the 49% shareholder than others who are may value the founder holding defacto controlling stake negatively, thus discount the stock less than its book value .
This is also why sometimes same class of shares held by different people get priced (i.e. valued) differently in a single deal. Recently the paramount one is a good example .
Another famous example Yahoo was valued negatively for a long time before its sale to Verizon, I.e. its market cap was less than the value of its alibaba holdings .
One off events like county cases , drug trials likelyhood of a merger approval from regulators are hard to price accurately and can skew.
Can the board replace the CEO if the CEO has 49% of voting rights?
There are "scavengers" out there who buy a company if its assets are worth more than the market cap, close down the company or otherwise spin out the assets, and thus earn more than they paid for the shares.
Possibly true 20 or 30 years ago, but now shares are speculative assets, their worth determined by what the market thinks they might be bought for by a greater fool.
If the company has no chance at future profit, it becomes a simple share of assets. There are plenty of companies with assets only and no revenue or employees.