Price of Culture? $27 Billion
We talk a lot about the culture at the workplace and how it affects well-being, motivation, innovation, and so on. However, the problem with topics such as culture is that they are inherently intangible and can’t be valued on P&L or Balance sheet of a company….until now Microsoft buys Activision for $69 Billion
Microsoft - which is known for being a boringly stable, ethical, positive workplace - decided to buy Activision - which recently was in news for sexual harassment lawsuits and is known for frat-boy culture. What makes this case interesting is that Activision has a stable, growing, and profitable business that struggles with culture and not like WeWork which struggled with culture AND business as well. And hence Activision's acquisition gives us the opportunity to price culture using public market data.
Let’s look at the timeline
Feb 2021 - Activision stock $103.81 with Market cap of $72 Billion
July 2021 - Harassment claims come out
July 2021 - Activision shares start dropping - Activion drop $7.7 Billion in value or 9% ( drop it like it hot)
Aug-Dec 2021: More claims come out, executives are fired or leave and employees walk out and demand CEO to step down
Dec 2021 - Activision shares are hovering around $56-58 and have lost 40% of their value and now has a Market cap of $42 Billion
Jan 2022 - Microsoft buys Activision for stock $95 at $69 Billion market cap
Now we can argue that the loss in Activision’s valuation is because of its culture and not its business. And the offer from Microsoft assumes that Microsoft will be able to bring in its stable culture to Activision and make up for the lost value.
Microsfot’s offer - Acitivion Market cap (Jan’22) → $69 Billion - $42 = $27 Billion
This difference(roughly 30% of the company value) right here is the price of culture valued by the public stock market.
So next time your CEO says we can’t put a price on culture - you can correct them instantly.
Price of Elon Musk’s Tweet? $2.2 Billion
Market cap of Dogecoin
Before the Tweet - Jan 25 2022 - $17.7 Billion
After the Tweet Jan 26 2022 - $19.9 Billion
Of course, Dogecoin lost some of those gains the next day but still, the market cap hovers around $18.8 Billion.
Price of political volatility? $160 Billion
Political instability or volatility is probably the easiest to price since the repressions are felt directly on public markets.
Looking at the ongoing Russian-Ukrainian armed buildup, we can infer this again
Russian stocks sink 8%, ruble plunges to 14-month low as conflict fears intensify
As of Monday afternoon in Europe, the MOEX Russia Index had dropped around 5.9% and is now down more than 15% year-to-date. The Russian RTS Index was down 8.1% on the day and around 19% lower so far in 2022.
The Russian ruble was down 2.5% against the dollar at 79.17, its lowest since late 2020.
Russian companies have lost a combined $160 billion in value since Jan. 1, according to market data.
Falling currency and the stock market is not a sign of confidence for Mr. Putin.
Price of German hesitation? 20 Billion euros
Germany’s lack of stance on Russia and Ukraine's armed buildup rattling its allies. Germany is hesitating to take strong action against Russia. A lot of news articles relate it to Germany’s communist ties to the Soviet Union however the answer is clear - Nordstream 2.
Nordstream 2 is a pipeline built by Russia and Germany that is almost complete and supposed to double the gas imports to Germany from Russia and at the same time cut out Poland and Ukraine from the transportation tax AND cut the dependency on Poland and Ukraine in case of war AND give Mr. Putin the keys to blackmail Germans for the next 20 years by making germans totally dependent on Russian gas. *Well played Russia*
The government has emphasized that it would act in concert with the EU and NATO if Russia were to launch an attack, but Berlin hasn’t even been able to promise that it would put a stop to the Baltic Sea gas pipeline, Nord Stream 2, in the event of war. The pipeline has long been extremely controversial because it would allow for the direct delivery of natural gas from Russia and Germany, circumventing both Ukraine and Poland. Berlin apparently continues to think it conceivable that gas will ultimately flow through the pipeline – even if Russia attacks Ukraine. What, then, is the value of all the talk of "consequences"?
Nordstream 2 has taken 10 years and 20 Billion euros to build and will carry billions of dollars worth of gas over the next 20 years.
BTW this is hilarious
Under mounting pressure to provide more help to Ukraine as it braces for a possible Russian invasion, the German government proposed last week what it thought was a bold new initiative: it would supply Kyiv with 5,000 helmets. The announcement was met with a wall of derision. “What kind of support will Germany send next?” asked Vitali Klitschko, the mayor of Kyiv, the Ukrainian capital. “Pillows?”
Price of fighting with Investor? $100 Million
Step 1: You get new investors onboard with semi-legal fundraise
Ripple Caps Record Year With $200 Million Series C Funding
Step 2: You get into a fight with SEC
The company is embroiled in a lawsuit, filed in 2020, in which the agency accused Ripple of raising $1.3 billion in unregistered digital-asset securities by issuing XRP tokens. The SEC's key claim is that XRP is not a currency, but a security, and therefore subject to strict securities laws. Ripple has argued that XRP is a virtual currency, not an investment contract.
ahem ahem, the price of Ripple in the last year went from $0.31 → $1.5 → $0.55. 200% fluctuation within 52 weeks, if it’s a currency, then it’s a pretty bad one.
Step 3: Your investor don’t like you anymore and sue you to get their money back
Step 4: You win the lawsuit and now want them gone
Step 5: You pay them 50% more to get out
Ripple is reacquiring the equity shares at a $15 billion valuation, which suggests the investors made a 50% profit in just over two years.
That’s all folks.
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