If you own all the shares then you can control the company via voting control. That’d generally allow you to prevent the issuance of new shares and you could hand pick the board as their terms expire. It’s not immediate, but you’d eventually be in control of everything.
Not all shares have voting power, and even so the voting power of those shares (if they were 2% of the company for example) may be proportionally tiny compared to the founders/board/execs.
For example shareholders don't have any control at FB, since Mark controls 51% of the voting power.
It's fairly unusual to have companies with this sort of structure. Why would you ever buy shares in a company that doesn't pay dividends and where you can get infinitely diluted and have no control? (other than for speculative reasons)
Discounted future cash flow includes all of dividends, possible future acquisition, and greater fools buying it from you. The last one being what drives Tesla and cryptos.
I just checked and you are right (1835 vs 1827). Funnily, there is this:
"but unlike common shares, they do not confer voting rights to shareholders. As a result, these shares tend to trade at a discount to Class-A shares. "
Tech/growth doesn't pay dividends as dividends are a signal your business is done growing. Dividend companies would rather return capital to investors than place more bets and keep growing.
Tech and growth stocks have minted many millionaires. And sometimes overnight.
This is also why growth companies sometimes don't reach profitability. They're spending their revenue eating the rest of the market and gaining monopoly.
> no control?
People that invested in Facebook made lots of money. They were probably fine with the arrangement. If they stop being fine with it, the stock price will decline.
If you own all of the voting shares sure. But a company can have 100,000,000 shares, own 99,000,000 of them, so only 1,000,000 are trading. If you buy all 1,000,000 of those shares you don't have much power.
I think the above commenter was trying to say: you can't always own 100% of the outstanding shares with voting rights, because in most cases insiders hold many shares that they will not sell.
That's about two classes of outstanding stock with different rights held by different group of stockholders, not about stock held by the issuing company.
So then you agree that there could be situations where only a couple percent of the ownership of a company is available on the market, and if you buy all of those shares, then you would not control the company?
As in, you agree than a couple insiders could control a large majority of a company, and that this percentages of the company would not be on the open market, and therefore even if you buy all of the shares that are available on the open market (and the definition that I am using would disclude these shares owned by these insiders), you would not control the company?
> So then you agree that there could be situations where only a couple percent of the ownership of a company is available on the market, and if you buy all of those shares, then you would not control the company?
Sure, it's possible that at any given time people aren't offering to sell a majority of the voting power of stock, or (theoretically, at least) any voting stock at all (it's even possible that the only class of stock trading on the market is nonvoting; SNAP I think does that.)
I was taking issue with the particular claim, made twice in the direct chain of ancestry of this comment, that a company could simply hold the majority of it's voting stock itself, so that holding 100% of the shares not owned by the company would not give you control since the company itself (presumably, it's management) would exercise most of the voting rights. It doesn't work that way.
Fair enough, but your comment wasn't phrased specific to that example, it was a general statement about owning 100% of outstanding shares: If you have 100% of the outstanding shares, you have 100% of the voting right
I mean, this has to be true right? Otherwise the stock market doesn't function as shared ownership, it would be more like Kickstarter at scale with no recourse for failure to deliver.
Plenty of takeovers have been conducted on the open market, even without consent of the board, also known as a hostile takeover.
Class B shares with no voting rights have been a thing for a long time. When the US government bailed out the banks in 2008, they made sure to buy only Class B shares, so no one could claim the government nationalized the banks and put them under their control, rather they just injected capital.
You are both right, but you are missing the point. It is entirely possible for controlling interests to be held in other classes of shares (or even common), that is not counted in the FREE float available to trade.
