SNAP IPO should herald the death of dual share class listings. They sold billions in equity to the public, but gave the shares 0 voting rights. So now investors have no recourse to push for changes at the board level.
S&P is now excluding such share structures from companies it considers for the S&P 500, so I would anticipate that this will get much rarer among public companies.
Interesting. Not saying I don't believe you, but I'm interested in what a company might perceive to be the value of being part of the S&P 500. Is it just a reputation boost? Or is there something concrete?
There is a massive value. It means that all SP500 tracking ETFs ($SPY, $VOO etc) have to buy your shares. It's a huge boost to your share price, especially with the rise of passive investing.
I always thought of SNAP shares as 'baseball cards'.
In the baseball card mania of the 90s, it was said they go up and down in value as the player does well and poorly. But, hey are completely devoid of inherent value.
I'm told SNAP shares would still get you some % if the company is bought, but I figure if someone does by SNAP they'll just purchase the voting stock from the founders and leave SNAP out there hanging around.
What makes you think inherent value of stock is tied to voting rights?
If in the future Snapchat pays dividends, won't the non-voting SNAP shares still have dividends paid out at the same rate as everyone else? It was my impression that this (along with other profit-sharing mechanisms like buybacks) was what drives the inherent value of stock.
Its my impression that dividends are set per share class. What if SNAP only pays dividends on profit to the Series B and C? So how would members of class A petition the company to give dividends to them? What recourse does the Series A holders have? Since the Series A have no power to enforce dividends, the granting of dividends would be tantamount to charity, and thus very unlikely.
Normally, you wouldn't do that because the stock owners would vote in a new board of directors, or they'd just vote in a dividend.
Perhaps if SNAP's money problems get too dire the founders would open up class A to more rights in order to sell them to raise money. My guess since people still trade the baseball cards, they wouldn't need to.
There's nothing illegitimate about raising money without selling voting rights. You want voting rights, want to play active investor? Buy another stock.
Sure, you can do that too. The comment you're replying to is arguing that all these options are legitimate, and buyers are adults who can buy something that matches their investment theses.
There are all sorts of rules you have to comply with to be listed on a public exchange. One of them used to be equal voting rights. I am fine with buyer beware, but it is really important to understand that "buyer beware" is not the philosophy that the NYSE / NASDAQ was built on.