10% doesn't make up for the fact that GOOG stock already peaked way back in 2007, which means any Google stock options granted at today's prices are worthless to new employees.
Google is essentially powerless to compete with Facebook's stock option potential value.
1) Past peaks aren't relevant to the value of options granted at today's prices. The question is whether GOOG will be higher or lower next year.
2) Options and equity that Facebook gives its employees aren't free. They have a market value, which Facebook is giving in return for an employee's efforts.
The real issue is that Google has more than 10x as many employees as Facebook, and its value is likely to be more volatile, which is good for risk-seeking employees.
Edit: Both Google has about 10x the Market Cap and 10x the employees, so they're at least in the same order of magnitude in terms of how much equity can be given away in each.
Investing based purely on fundamentals works for value stocks held for very long periods of time. I would not consider GOOG a value stock, nor a good long term investment -- which was the point I was trying to make. On both the short, and long term Google stock isn't looking great, which makes options at today's prices unlikely to be worth much, if anything.
This logic seems dumb, Facebook is a big company, if you're joining Facebook now, even as a star hire, are they really going to throw enough equity at you to make you a millionaire in some unknown future IPO? And you have no idea when the IPO will happen, it could be 10 years before you can liquidate. And you might get screwed over on some dilution or the strike price or something currently undisclosed, private companies are notoriously secretive about their financials.
It's just too many unknowns. I don't think it makes sense to plan your life around hitting this options jackpot.
Attitudes like this is why I had to write a book about startups. In 2003, people said the same thing about Google. It turned out that yes, joining Google in 2003 had a very good chance of making you a millionaire, even if you weren't a star hire.
Guess what? Facebook is in the same situation Google was in 2003 today.
It's the difference between your stock options being worth $0 (in the case of Google), and they being potentially worth 10X (in the case of Facebook). I'd say 10X is a pretty big difference.
Oops. Memories fade. At any rate, my point is that a lot of people have options with a low strike price. I'm not sure what the downfall of the economy has to do with this fact.
I've heard that Google gives RSUs (Restricted Stock Units) and not many options. RSUs basically are stock grants which vest over time. Of course, you don't get as many RSUs as options. But there's no question of RSUs going underwater (unless the company folds).
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10% doesn't make up for the fact that GOOG stock already peaked way back in 2007, which means any Google stock options granted at today's prices are worthless to new employees.
Google is essentially powerless to compete with Facebook's stock option potential value.
A couple of issues with this:
1) Past peaks aren't relevant to the value of options granted at today's prices. The question is whether GOOG will be higher or lower next year.
2) Options and equity that Facebook gives its employees aren't free. They have a market value, which Facebook is giving in return for an employee's efforts.
The real issue is that Google has more than 10x as many employees as Facebook, and its value is likely to be more volatile, which is good for risk-seeking employees.
Edit: Both Google has about 10x the Market Cap and 10x the employees, so they're at least in the same order of magnitude in terms of how much equity can be given away in each.
* The question is whether GOOG will be higher or lower next year.
GOOG stock right now is making a triple top under the 2007 peak. It's done for. I dare you to go long. I double dare you to buy a call.
The bottom line is I would take any Facebook option at today's prices, over any Google option, period.
lulz at people who buy technical indicators over stock fundamentals
Investing based purely on fundamentals works for value stocks held for very long periods of time. I would not consider GOOG a value stock, nor a good long term investment -- which was the point I was trying to make. On both the short, and long term Google stock isn't looking great, which makes options at today's prices unlikely to be worth much, if anything.
This logic seems dumb, Facebook is a big company, if you're joining Facebook now, even as a star hire, are they really going to throw enough equity at you to make you a millionaire in some unknown future IPO? And you have no idea when the IPO will happen, it could be 10 years before you can liquidate. And you might get screwed over on some dilution or the strike price or something currently undisclosed, private companies are notoriously secretive about their financials.
It's just too many unknowns. I don't think it makes sense to plan your life around hitting this options jackpot.
Attitudes like this is why I had to write a book about startups. In 2003, people said the same thing about Google. It turned out that yes, joining Google in 2003 had a very good chance of making you a millionaire, even if you weren't a star hire.
Guess what? Facebook is in the same situation Google was in 2003 today.
2 links: http://piaw.blogspot.com/2010/05/compensation-thought-experi... http://piaw.blogspot.com/2010/04/facebook-google-redux.html
It's the difference between your stock options being worth $0 (in the case of Google), and they being potentially worth 10X (in the case of Facebook). I'd say 10X is a pretty big difference.
$0? GOOG is at $624, I'm sure there are a lot of googlers sitting on options with $300-500 prices.
Considering the repricing [1] that occurred earlier this year, yes.
[1] http://googleblog.blogspot.com/2009/01/announcing-googles-em...
This is from Jan 2009, not this year, and I'm sure you're aware of the fact that the downfall affected the whole economy, not Google in particular.
Oops. Memories fade. At any rate, my point is that a lot of people have options with a low strike price. I'm not sure what the downfall of the economy has to do with this fact.
I've heard that Google gives RSUs (Restricted Stock Units) and not many options. RSUs basically are stock grants which vest over time. Of course, you don't get as many RSUs as options. But there's no question of RSUs going underwater (unless the company folds).
I would bet Google gives mostly restricted stock, not options. So not worthless, but not as much potential upside.