How much is your equity worth after ipo?

Airbnb / Eng airbyebye
May 10 128 Comments

Now uber, lyft and pinterest all go public. With a large number of stocks vested, how much tax do you owe? How much do you actually take home? I wonder if somebody can walk through an example. Thanks

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TOP 128 Comments
  • Expedia piXo51
    Here's one from https://ipo.orgtfo.info

    Example for RSU:
    Assume you have 10,000 shares of stocks vested on Lyft IPO day.
    At $72 per share, they are worth $720,000. If Lyft withholds 25% (worth $180,000), then you would be awarded 7500 shares.
    Assume you are taxed at a rate of 40%, your tax due would be $288,000 - $180,000=$108,000.
    If the stock price goes down to $50 when the lockup window expires, then you need to sell another $108,000/$50=2160 shares to cover taxes.
    Now you have 7500-2160=5340 shares left, and the total value would be $267,000. So, it's not as much as you thought.
    May 10 35
    • Lyft twigs 63
      (3) is incorrect
      May 12
    • Airbnb bee & bee
      (2) is also incorrect. I think FB may be confusing “vested” with “liquid”. The only condition for a share to be vested is (1) (and possibly some terms of employment).

      In order for it to be *liquid*, ie able to trade a share, 1-3 have to be met.

      Having said that, I am curious about the experience from someone at FB who may have gone through a full tax cycle post-IPO and would probably know best, firsthand. The rest of us seem to be guessing something which (hopefully) has a concrete answer.
      May 12
    • New / Eng going2g
      Actually I believe technically stocks only vest after (1) and (2) have occurred. That's why the tax liability occurs at the time of IPO, even though your vest date may have been years earlier.

      Therefore, only (3) is incorrect.
      May 12
    • Google 3/2=1
      Capital loss limit is 3k but you can use it to offset capital gains till forever so that needs to be factored in your calculation. It's not worth zero. Basically at the end of the day you are only paying taxes on the basis at which you sell the stock not at the IPO price. But you are giving a interest free loan to IRS until you can offset the losses with other capital gains
      May 13
    • Amazon oojgfr
      The lockup period also doesn’t have anything to do with taxes, it’s just so all employees can’t go cash out the day the company goes public and sink it.
      May 14
  • Amazon / Eng Dr. 👩‍🦱
    $352000
    No tax since none of it vests this year!
    May 10 8
    • Amazon / Eng Dr. 👩‍🦱
      6 month
      May 11
    • Nielsen nqED75
      No tax because it's essentially an IOU at this stage
      May 11
    • Netflix / Eng notanenemy
      Can u break down your offer when you joined pls?
      May 11
    • Airbnb New999hire
      You're still gonna get taxed. You'll realistically only see about 180k.
      May 12
    • Facebook smje50
      Amazon leaves you the bill when you are granted stock and when you sell.
      May 13
  • Anaplan / Eng ndjrufh234
    Also be careful about exercising options. That is when you buy your vested shares at the grant price.

    I purchased mines asap because I wanted to benefit from long-term capital gains, which is holding the stock for over 1 year.

    Even though you haven’t sold the stock, it has tax implications because the different between the grant price and market price at the time of exercise is calculated towards your income for AMT.

    Bottom line in TurboTax, when I entered my option exercise info I almost had a heart attack. AMT sucks!
    May 10 17
    • DoorDash ayU68hq
      Hindsight is 20/20. If your company had gone under, you would have lost everything. Early exercise only makes sense when the amount of money you stand to lose is negligible compared to your net worth. Usually true only if you joined before series A or B.
      May 12
    • DigitalOcean vfyuuyy
      I exercised around 40K options. FMV was 5.17 and strike price was 89c. Which means 171K gain. According to my accountant I’m looking at about 45K AMT in 2020 tax.

      Combined household income is in the 300-500k range
      May 12
    • DoorDash ayU68hq
      @ayU68hq that makes sense at the AMT tax rate of 26/28 percent on your 171k gains
      May 12
    • Broadcom Ltd. tooktook
      Can you describe more about options taxation?
      May 14
  • Lyft McGee
    ~3M in total equity at Friday’s closing price
    May 11 10
    • SAP ksYR03
      How many RSUs did u have and what time
      Frame were they given? Again it’s equity value. How much do u expect to make if after lockup stock price is under 50
      May 12
    • Lyft McGee
      I make market rate (in terms of FAANG) for my level of experience. Don’t really want to give out RSU # or timeline as it may be identifying. I’m not calling it quits until net worth is over $7M. With current grants I’m at $5.75M
      May 12
    • SAP ksYR03
      What’s ur level of exp and how many years at Lyft
      May 12
    • Lyft McGee
      15 YOE. Not saying how many at Lyft to avoid doxxing myself.
      May 12
    • New cbbu61
      That will translate to half of that in cash. It's a good start but nowhere near retirement amount 🙁
      May 14
  • Microsoft no-sql
    Looks like housing market in Bay and Seattle will skyrocket in 6 months when employees start selling stocks
    May 11 4
    • Mixpanel xYMh86
      Nah
      May 11
    • Reddit / Eng pzqf14
      The market is robust to IPOs. The folks that would have enough to outbid the current avg buyer represent such a small population that their lumpy income won't move the market by a lot. Also, after an IPO, there's often some amount of flight.

      I wouldnt be scared on the short run. For example, look at the south bay market after FB IPOed, the most hyped and largest IPO at the time. The market was less mature and the IPo was bigger than any of the ones that we have this year. I dont know the numbers but I imagine that the year that FB IPOed also came with a few others, making it a decent comparable.

      That all said, idk tbh
      May 11
    • Oracle stxmic0725
      M0l
      May 11
    • Facebook public2
      The fb ipo rocked the market big team and created new cities. Redwood city wasn't even on the map for make people before 2013. The study on real estate is always 10 miles around the physical office location though so no fb did not have a material impact on epa.
      May 12
  • Square czql35
    Easy answer, 50%
    May 11 3
    • OpenText TSLAstock🤣
      Bernie would think that is too less.
      May 11
    • New / R&D aFuC30
      Agreed. Lots of people making this more complicated than it is. 46.5%. To be more exact.

      EDIT: I don’t live in CA so i forgot the state income tax is so high. “Easy answer” is dead on @ 50%. You might think that is flippant sarcasm, but you are going to pay an accountant a lot and end up with the exact same 50% result.
      May 12
    • Facebook / Eng
      baldnshort

      Facebook Eng

      PRE
      Facebook
      baldnshortmore
      Any income above 100k should be taxed at 90%. I don't understand why people would need more than that.
      May 18
  • Symantec nya_nya
    Reading this thread makes me feel extra poor. 😂😭
    May 12 1
    • ADP / Mgmt
      Runner131

      ADP Mgmt

      BIO
      I call myself "Damage Control" as I turnaround poor performance of others and get results.
      Runner131more
      Said everyone not in the Bay area or Manhattan.

      Right there with you
      May 12
  • SAP ksYR03
    I would just say don’t hold for long. The US stock market is going to crash. S&P can go all the way to 1200. I expect by end of year or early next. It’s better to sell and then buy when you are at bottom. But the market will crash. And companies which do not make money will be crushed like anything.
    May 13 13
    • Adobe / Eng JohnnGalt
      Yes, assets inflated for sure and they will deflate, but not yet. Whats gonna happen is this: Trump will make sure Fed launches another QE soon by crashing market just a bit using trade war because he knows if Fed doesnt do QE preemptively now 2020 will be ugly and some ultra left Bernie will win. So he will force QE, inflate assets even more, get reelected and then it all bursts in early 2021. So we still got some time, but yes GLD is the way to go. Shorting is dangerous in this manipulated market.
      May 13
    • SAP ksYR03
      Shorting is dangerous I totally agree. I lost quite a sum even when underlying fundamentals were weak.

      But I don’t think this time QE will work. Fed is about to do QE again. I think it will break now. And that break will be catastrophe will be huge. I made a prediction start of year that Bitcoin is going to explode like anything. There will come a day when Bitcoin will go to dizzying heights. It would be so high that ppl will get nausea.

      Problem is what I have learnt is most educated ppl are not educated actually. Folks here who are writing smirk comments have no brains to do the real learning. This time is diff. Demographics has changed. Millennials and Gen Z will not buy or reflate the assets. Baby boomers are retiring. It’s a huge demo shift. This generation thinks diff than Boomers. There is going to be a chaos like Yellow Vests in especially western countries when this shit happens
      May 13
    • Lyft xFFu83
      Seems like everyone watches the Big Short once and think they are the next financial doomsday prophet.

      I will be seeing all of your rental packets next year as the markets are higher, home prices are higher, and mortgage rates are higher. Please remember to include your dogs instagram account on the front page of the packet for extra points.
      May 13
    • SAP ksYR03
      Good luck bud. You can’t fix Stupid in life. I wish you hold Lyft after the lockup is done and see it vanish to single digit in front of ur eyes. And FYI when mortgage rates go high housing slumps. Learn basic economics before spitting out garbage. Anyway
      May 13
    • Lyft xFFu83
      Whatever you say SAP. Just remember, if you don’t have a cute dog with an Insta account, please go get one now and start working on growing the followers. It is the only way you won’t be homeless in 2020. I only choose dogs with highest follower count to live in my rentals.
      May 14
  • Lyft chinka
    Was ~5M at ipo price, now ~3M 😢
    May 12 8
    • Adobe / Eng JohnnGalt
      And it will be 1.5m when lockup period ends...
      May 12
    • Cisco cbd
      Sde?
      May 12
    • Lyft McGee
      Stock price is going to be a rollercoaster for the first year. I’m not selling anything until next summer.
      May 12
    • LinkedIn vmdF24
      Title and yoe?
      May 12
    • Snapchat AQTG64
      Staff?
      May 13
  • Splunk KE94107
    SPLK is long past IPO but I can say that the withholding rate has been about 42% combined CA state and federal. But the tax law changed and I wind up owing more (due as estimated taxes) since the 2018 tax law.
    May 11 5
    • Amazon eodndbe
      What is this new tax law? CA residents only or any company headquartered there?
      May 11
    • Atlassian / Eng
      Luffy, M.D

      Atlassian Eng

      PRE
      Facebook
      BIO
      A prematurely grumpy somewhat old man
      Luffy, M.Dmore
      Federal changes under Trump, nothing to do with California
      May 11
    • Splunk KE94107
      Right, California, New York, New Jersey, Massachusetts were affected more than low or no tax places like Florida, Texas and Washington State.

      There’s a huge housing boom in the Seattle area right now, triggered in part by people fleeing high-tax cities.
      May 13
    • Atlassian / Eng
      Luffy, M.D

      Atlassian Eng

      PRE
      Facebook
      BIO
      A prematurely grumpy somewhat old man
      Luffy, M.Dmore
      The problem with the Trump tax laws wasn't just the SALT limit. A lot of "higher income" (tech industry, not like genuinely wealthy) people who I know who complained about it were already losing part of it to AMT.

      The window where the SALT limitation actually mattered is smaller than most people think. Raising rates outright on upper income single people hurt a lot more folks I know than the SALT limit did.

      It was a badly done law; the withholding changes meant even people who ended up owing less total under the new law often ended up with a surprise (either no refund if they expected one, or owing money if they had their withholding set just so.)
      May 13
    • Google 3/2=1
      @Luffy M.D : well said and totally agree
      May 13
  • Lyft xFFu83
    Was just over 2m at peak of IPO day, sitting around 1.2m now. Much better than other startups I have joined which are 0 though!
    May 12 3
    • SAP ksYR03
      How many RSU u had? When did U join?
      May 12
    • Facebook oldskool2
      Damn that is quite the drop from peak. Are you going to hold or sell?
      May 12
    • Lyft xFFu83
      Hold for sure, not worried about short term.
      May 13
  • Adobe / Eng JohnnGalt
    Look at this. -8% again.
    May 13 0
  • Uber / Eng ipodrop
    Less
    May 12 0
  • Xchange Leasing / Ops
    AL1337

    Xchange Leasing Ops

    PRE
    Xchange Leasing, Fair.com
    AL1337more
    6k...
    May 11 0
  • Coupa / Cust. Srv. a3j38ndj
    When you do your taxes, be sure to look up cost basis. Your stock options are taxed as compensation, but if you just import the data from the brokerage, it will appear as capital gains.

    There's a lot more to it, but I'm not a financial professional.
    May 11 4
    • DoorDash ayU68hq
      What do you mean when you say stock options are taxed as compensation?
      May 12
    • Coupa / Cust. Srv. a3j38ndj
      That was how it was explained to me, since your stock options are given to you as a condition of your employment, the tax rate is different than if you had simply purchased the stock at that price and then sold it (capital gains).

      Like I said, not a financial professional, just sharing my experience. For example, I have typically done my own taxes, and just importing all my data left me with a tax bill of over $10k, but once I learned about cost basis and adjusted the return to properly account for my stock options, I got a return of more than $2k.
      May 12
    • DoorDash ayU68hq
      You are mixing a few things here. Stock options are different from RSUS. Based on what you are describing, it looks like you have RSUs as a part of you compensation. And yes, RSU value is considered to be regular income at the time of vest and then you pay capital gains on the profot/ loss at the time you sell.
      May 12
    • Coupa / Cust. Srv. a3j38ndj
      I do have RSUs as well, but the bulk of my shares were exercised options. Same advice holds, both had a huge difference in my taxable income once I learned how to properly input the cost.
      May 13
  • SAP ksYR03
    And then u add 40% tax so basically u end up making 800k. And I am assuming this 70k shares he got is for 4 yrs. he joined 2016. Not fully vested yet
    May 12 0
  • Microsoft oufly
    I feel bad...
    May 12 0

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