Round two? a.k.a. cash in while it's hot!

August 18, 2005

moneyshotSo I was catching up on news this morning and I ran across word of Google’s second stock offering.

I must say, it’s a brilliant move and if I were in that position I’d do the same. Why not capitalize on people grossly overvaluing your stock? Over on Om’s blog, he’s got a short analysis that puts their current market cap in perspective – it’s currently ridiculous. But hey, if you can raise an easy $4 billion by simply flipping shares at $285, why not?

And of course, people over there aren’t shy about flipping shares either. Check out the insider trading action. Wow, about $400 million being sold per month. I’d venture to guess that’s about as fast as you can possibly flip without causing a stir and a massive correction.

Then again, BillG sold about half a billion himself over the past few months. Wow!

Oops, I’m publicizing public information… oh no! Does this mean they aren’t going to talk to me for a year?

I’m personally curious as to how the market reacts to this when it happens. Do the laws of supply vs. demand apply here?

I also don’t exactly know how this type of transaction works… any bankers out there know? Are these shares the company holds? Or are they going to dilute existing shares?

Update: As Mt. Brightside notes, the tone of this post could come off as kind of bitter and attacking. The tone I was actually going for was slightly incredulous and very tongue-in-cheek. Thanks! 🙂

Update 2: Ah, so I’m not the only one… John Battelle links to a WSJ story that comes to the same conclusion.


No Responses Yet to “Round two? a.k.a. cash in while it's hot!”

  1. Mr. Brightside Says:

    Mark – You are awfully bitter and it comes through in your writing. You were upset with Google, you were even upset with Microsoft when you were there on their dime for a company picnic a few weeks back! If you aren’t a financial expert then I’m not quite sure what you are doing ranting on GOOG being overvalued. Since you aren’t a financial expert you might be interested to know that when you have stock options worth selling – selling them is the way you profit. Just an FYI.

    Also, I think people would still read your blog if you put a more positive spin on life – you might try it.

  2. markjen Says:

    Hi Mr. Brightside – I’m sorry you felt this post came off as bitter. I’m not bitter at either company; after all, business is business. What I pointed out was that many people currently think that the stock is overvalued. It’s a good move to cash in for a good gain while the gettin’s good – I’d do the same thing 🙂

    The valuation analysis I was talking about was covered over at Om’s blog. I read it and thought it was interesting.

    I hope you’ll understand that my tone was meant to be more incredulous and tounge-in-cheek than bitter and attacking.

    Thanks! 🙂

  3. Susan Says:

    I didn’t think you sounded bitter at all. You were just posting information that you came across and were asking for explanation from an expert on these types of transactions. I will never understand why people read blogs just to attack the blogger with negative posts! Obviously, they are jealous and bitter themselves or they wouldn’t take the time to insult others.

  4. MickoZ Says:

    Any comments or even critics often sound with a negative tone. Especially if it is a comments to someone that goes along those line “[Good, not bad, whetever], but … [I did not like X]” (hehe) or “You should… [improve] because […]”.

    A lot of people either think they understand you or they readed you perfectly (thinking you are full mad at m$ and goog, to me it sound like that path drove you to plaxo which you seem pretty happy about). Some people often feel attacked too when it gets personal (which is not the case there!).

  5. dantheman82 Says:

    Of course you have some sarcasm in your tone, but I generally agree. GOOG is grossly overvalued for what they currently have to offer, but they may be able to keep investors happy and keep above $200 for some time. I’d definitely flip it into cash and sell if I where Google so they could make some interesting acquisitions. Would they look into Plaxo for instance? 😉

  6. terry chay Says:

    Why should he be bitter? Even if he was still working at Google, his shares wouldn’t have been close to vesting. If he was working at Google, he’d have a case to be bitter: a larger number of shares on the open market will probably mean that the price will go down. I’m surprised that a “financial expert” such as yourself isn’t aware of the one-year cliff period standard in the industry.

    Also I fail to see truth in the insinuation that he was “bitter” at Google or Microsoft while he was working there, or even later.

    Finally, from looking at the blog world, people would “still be reading his blog” if he made wild-assed pronouncements instead of asking for “financial experts” such as yourself to correct him.

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