Google has a whole lotta staffers whose options are underwater - something I covered “ages” ago here. Ok, maybe not “ages ago”, but February 2008. It sure does feel like ages, because in February 2008 Google was off its all-time high of nearly $750/share at $550. I thought morale would be down then. Today, Google closed at $311. I mean, I am not sure if $750 was ever realistic (oh-oh, I think we’ve heard this line of thinking before), but the point is: a lot of employees’ options are priced with that underlying stock price.
Faecbook, meanwhile, can’t be a garden of euphoria either.
Facebook sold preferred shares at $15B, while its employees own common shares at a $4B valuation. As SAI points out:
As we all know, Microsoft, Li Ka-shing, and some German investors paid a $15 billion valuation for some preferred stock last fall. Importantly, this preferred stock takes precedence over the common: Microsoft will get its $250 million back before common shareholders get a cent (common shareholders will get to split up what’s left). So it is inaccurate to say that Facebook’s valuation has fallen from $15 billion to $4 billion.
Admittedly, to really discern what this all means, you’d need to get your hands on the company minutes and most importantly, the unanimous shareholders’ agreement, however, one thing is certain:
It cannot be fun times at either headquarters. But what is the best remedy to cheer up employees saddened by paper loss? The potential of a pink slip… so I am hoping that everyone cheers up real soon.
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