Readit NewsAs someone who is pretty skeptical and reads the fine print, I think this is a good move and I really do not see a downside (other than the fact that this probably strengthens the nVidia monoculture).
Wait, squarespace isn’t a division of square?
Nope. Totally different company and founded about 5 years earlier than Square.
The other replies explain the 30% with circular reasoning and I don’t find them convincing, so here’s a more absolute and testable hypothesis: at the average rate of S&P500 return adjusted for inflation, 30% is about 3-5 years of investment. What if that’s the average period of investment (i.e. time between buy and sell) for a typical retail investor for any given stock?
If that’s the case, 30% is the minimum premium at which not only are you speedrunning returns for existing investors, you’re also doing it for the average person who was going to invest in Squarespace today.
I thought about that too, but realized that it is double counting the returns. If you look at the Discounted Cash Flow (DCF) method for valuing the company, the current value of the company is already the sum of the discounted cash flows from the future. i.e. the next 3-5 year returns are already priced into the pre 30% hike value.
It is interesting how most M&A transactions trend to have a 30% premium above the trading price. I have tried to investigate why but could not find a good explanation to why this number is so prevalent.
When working on art projects, my trick is to specifically give all feedback constructively, carefully avoiding framing things in terms of the inverse or parts to remove.