The game of RSUs

Amazon collarwhy8
May 10 28 Comments

Guys,

Request you all to think of the big picture here and keep aside your caps of bias/affiliation for once.

I genuinely think that this game about RSUs given out as a part of compensation is about to end. Think of it-it is not even real money-just stocks diluted of the actual shareholders who put real money on a company because they bought into what the company’s CEO told them (via annual shareholder letter, etc). Most FAANG companies have extremely unhealthy finances(maybe except Apple) due to international expansion-eg, Amazon’s business in India are bleeding(retail/Prime businesses are in deep red, Kindle business has flattened out and about to be closed) and projected to bleed for the next 5 years, Google/Youtube despite its ads business is extremely expensive to run and not sustainable, and ads themselves will lose value once everyone starts noticing how ineffective they have become.

All the talks of ‘expanding’ and ‘innovating’ are mere jargons as these companies struggle hard to sustain and further inflate their valuations. Make no mistake, I work in one of the FAANGs and my observations here are without any bias.

I just did a poll here and found out that ~40% of our TCs here on an average are RSUs. Just think of it-will working at FAANG continue be an attractive proposition minus the RSUs? What if you had to live with just your base pay? Internet businesses are not as efficient as they are perceived, and very expensive to run(especially with that amount of data, creating distributed systems, etc)-that is why they don’t have as much free cash flow as they would like/dream, and that shows in your not so impressive base pay. Base pay is indeed what the company could actually afford to pay you from their current state of finances-and the RSUs, well-they are just created out of think air by making a buzz in the shareholders minds (its actually more of an art, like poetry). Effectively, 40% of your salary is in a way ‘crowdsourced’ and funded by people who have bought into the ‘vision’ of ‘investing in the future’ and ‘not creating short term value’-RSU is you getting some money from some random shareholder, not your employer. I think ’investing in the future’ is also a proxy phrase for not having to say ‘we aren’t able to figure out how to do business’. I am not saying they know nothing but they certainly market themselves as far more capable than they are.

I think somebody out there will publish a powerful blog and these companies will be asked by shareholders to start generating and reporting actual profit. That is when the share prices will come crashing down and that will be the end of RSU game.

Thoughts?

comments

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TOP 28 Comments
  • AIG / Product
    Raging

    AIG Product

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    Deloitte Digital
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    Counseling CxOs for AI-first strategy !
    Ragingmore
    If you have conviction, go ahead and short the stocks. Put your money where your mouth is.

    Blog posts don't crash share prices, kiddo!
    May 10 1
    • Amazon collarwhy8
      OP
      Worse things than blogs can crash prices. The mention of blog was a way to say that this really is a house of cards.
      May 10
  • Roku smashbros
    Did you just say fang companies have bad financials? 🤦‍♂️also RSUs are counted like cash outlays.
    May 10 3
    • Amazon collarwhy8
      OP
      If they pay equivalent of cash instead of RSUs- yes they will go bust. Somebody can do the math here- the financials are a public affair. If not I’ll publish something soon after looking at them.
      May 10
    • Please educate us
      May 10
    • Facebook whodattt
      Lol so op let me get this clear you havent looked at the financials but you re writing a 1000 word post about how financials are bad...... 😂😂😂
      May 10
  • Box Voldy
    OP is sad he does not have RSUs and is trying to make himself feel better..
    May 10 3
    • Amazon collarwhy8
      OP
      Thanks for your contribution. I have mentioned many times that I am a beneficiary of RSUs myself. Go out and explore the world, outside of your screen, you will find that there are many people who can be critical of things they themselves benefit from.
      May 10
    • Box Voldy
      You are most welcome.! 😂
      May 10
    • Box Voldy
      You seem to be pretty insecure.! Good luck
      May 10
  • Wayfair WNEm45
    RSU is not startup life. Because you just described a startup.

    RSU is accounted as cost in all reporting - it encourages employees to do the best thing for all stakeholders because the employee becomes a stakeholder.
    May 10 0
  • New / Eng |l|l||l|l|
    Netflix
    May 10 0
  • Amazon ezy
    Lol!
    May 10 4
    • Amazon collarwhy8
      OP
      Really? Lets wait and watch.
      May 10
    • LinkedIn hampdan
      Lol ok lets watch. How soon do you think this will happen? Enlighten us. Go on and give us conservative prediction.
      May 10
    • Amazon collarwhy8
      OP
      Haha, it will happen exactly one day before you plan to sell all your stocks and retire in Antigua. But seriously, we shouldn’t be too oblivious of markets crashing. Always be wary of how much of your dreams rely on RSUs.
      May 10
    • Amazon collarwhy8
      OP
      And I believe it should happen in the middle of 2020- after Q2 earnings.
      May 10
  • Facebook whodattt
    Lol OP you have no idea what you re talking about. I would honestly rather take my whole salary in RSUs. Invested in the market without even having any money. If RSUs tank you can always switch jobs. So in essential you re taking the upside without any risk.

    All FAANG have veey very healthy financials as shown by the stock market and millions of investors wanting to buy a piece.

    Honestly sounds like you re just bitter that other people have RSUs.
    May 10 1
    • Facebook whodattt
      Ive been in two. Not all that bad. Less traffic, cheaper housing and cheaper stocks. Sounda like a good place.
      May 11
  • Million mistakes in how you think. Do some reading how world works
    May 10 1
  • Goldman Sachs fake engineer
    The accounting works out just fine for RSUs, you don't need to think about that or whether the company can afford to be paying that much if it were cash, because financial markets work quite well.

    The risk to the employee is the downside risk of the stock, which is not very difficult to estimate. There's put options which give you an absolute bottom to how bad it can get if you're convinced it's going to drop a lot. If you don't want to spend money on insurance for your RSUs, you can just use a conservative P/E ratio estimate (adjusting for stuff like the fact that Amazon plows most of its money into R&D), which gives about a 50-70% worst case loss for most of the big tech companies.
    May 12 0
  • Riot Games
    ifbx7474

    Riot Games

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    Riot Games
    ifbx7474more
    RSU’s are compensation. As an employee you are also incentivized to do the right thing for the company’s success since you are in fact an owner, even if it’s just 10k. You share in the success of the company since your TC is aligned with company outcomes. Overall it’s a very practical system.
    May 10 1
    • Amazon collarwhy8
      OP
      Get the point, but employees and shareholders are different things. These companies have made employees part shareholders. But do shareholders get the benefits of employees- like a fixed income(dividends?) from their investment?
      May 10
  • Salesforce icrh4a9
    There are worse problems in life than having RSUs
    May 10 1
    • Amazon collarwhy8
      OP
      Of course, but for everyone else except the folks here at blind- who only care about TC. And TC is all about RSUs, hence my post.
      May 10
  • Google / R&D kdiejebdhb
    I think my Google RSUs are a pretty reliable income source, thank you very much. As well, I only budget living expenses from my base pay so RSUs are savings.
    May 10 0