I too am livid. 80M new shares on top of a 225M base, means that 35% of the company just got stolen from its shareholders (give or take). Boy was I wrong about a few things, a few important things, but what to do?
Lot's of clearer thinking today, vs. yesterday, amongst the noise, but I am using Rick's thread because I think it is THE most important idea presented in the final analysis in respose to what has just happened to us.
Notice I say "us" and not Poet.
My all time favorite investment book is Marty Whitman's "Value Investing: A Balanced Approach." His critical insight is that investors have to understand the difference between "the company" "management" "shareholders" "bankers" and "the BOD."
The company, an inanimate object of potential wealth creation, doesn't care about the share structure, or who owns it. all it cares about is developing its wealth creation machine.
Management, controlling the company, doesn't really care about the share structure either, because they get options, (every year!) that keeps their ownership stake whole, no matter what.
We all know that pre-revenue venture companies are "risky." What seems to be somewhat mis-understood is that WE, as passive minority non-controlling shareholders, bear most, if not all, of the financial risk. That's the deal. All those other groups have leverage that enables them to not bear the risk, or at every turn deflect the risk to...us. Hell, we don't even get a seat at the table, we are like water boys sitting quietly in the corner, waiting to be called. (and don't tell me about "voting rights", when management controls the proxy apparatus completely.)
When I bought my last chunck of stock, it was under the belief that there would be no more dilution, that PTK was ramping into revenue, and the risk of what just happened was behind us. I was wrong. There has been a delay, (for whatever legitimate reasons) and all the different groups around the table that is this company are deflecting the cost of the delay onto us. That is what just happened.
Rick's post is critical, because after the good ad hominem jabs at management, what does he say? He is buying more to protect his initial investment. I'm sure he isn't happy about it, but that's the move. Obviously many here don't have the wherewithall, experience, temperment, or money to do likewise. But this would be the logical response. Why? Because nothing has changed fundamentally about the company itself.
To attract US institutional investors, management has sold us 35% down the river. This is not the same thing as "the VCSEL doesn't work." So when abeautifulpoem says "...lost their net worth..." I don't know what he is talking about. We have all lost 35% of our investment, and if I could, I would buy more stock. Not because I like what just happened, but because I think the wealth machine still works, and I DO believe that that is what is most important--and I believe that management thinks that too. They didn't just screw us for kicks, they screwed us to save the development of the company. For them, that's a no brainer.
Life, and investing, is not black and white. Don't let anger cloud your judgement. I don't think the story is over, not by a long shot, but the risks are real as we just found out, and the simplest way to deal with it is to be very prudent about your position size! If you have 100% of your investable funds in one (pre-revenue) publicly traded company, well, then, that's on you.
My prediction is that no smoking gun will be found, the company will move forward, and the $70 club will simply become the $45.50 club (35% haircut).
I personally don't have any more money to invest, but I will watch the 2017 development with two doses of paitence, and a third dose of rye. (maybe the other way around). We are not the first, and won't be the last group of shareholders who get screwed when there is a bump in the road.
If this IS your first rodeo, then think of it as the cost of your education, and that you are lucky to learn the hard way early in your investing life. There are probably a few older folks who got a bit over their skis on this one, and that's really rough. My heart goes out to you.
