Jeffrey Citron and CEO Snyder buy 100 shares of Vonage IPO

Posts: 62 · Full Forum Member Joined: Apr 29, 2005 Posts: 62

fanninja wrote:

ckudrna wrote:

Citron is the biggest shareholder, he owns more than 30% if i am not mistaken.

The 100 share purchase is always done but heads of the company at the open when the stock is first listed. Citron has lost 30% of his value in Vonage since it started trading, just like everyone else here that is holding shares, but Citron owns way, way way more shares than you will ever own, making a 30% drop in price worth tens of millions of dollars.

True, but there is a HUGE difference. Citron most likely paid PENNIES per share (I'm not talking about the 100 shares he purchased on opening day, but the roughly 15.5 million other shares he owns - assuming he does own 10% and I did my math right). Let's assume that on the high side his strike price was $1. The stock price is currently hanging around the $12 mark, which means his PROFIT is still $11 per share. For any of you who bought in at the IPO price, your LOSS is now at $5 per share. While Citron is theoretically losing money with each drop in price, he will still make around $150million on this. Vonage customers who bought the max (1300 shares) have lost ~$6600 so far. My advice - sell now. Once the 180 day lockout period ends, sit back and watch the Vonage employees dump their shares.

what? What do you mean he paid pennies? He started the company. He has contributed millions in capital and lots of work into the company. Vonage did not just sell Citron shares for real cheap, he has always had a huge equity position in the company. Once the company went public it provided him nothing more than a venue to cash out by selling. Just because it is a public company now does not mean that he just all of a sudden got a large equity position. You can have equity ownership in a company without a stock trading publicly...............

The 100 shares is tradition. Nothing more. There is no use in trying to accuse him of doing something that is so awful because he bought just 100 shares on opening day. He has a lot more of his wealth tied up in VG than you do.

Posts: 16 · Vonage Forum Associate Joined: May 31, 2006 Posts: 16

bigtuna wrote:

So, you're telling me, the day the company goes public and I got these 200 lousy shares, I bought more shares than either Jeffrey Citron or the CEO of Vonage?

What the $%&#@ did they buy 100 shares for each? TO BE SYMBOLIC?!?

This smells more and more like we've been "had".

Tuna - what smells is fishy. Check your immediate surrounding area. These guys have no motivation to buy shares. Why? I would speculate that their employment deals offer bonus potential that gives them options to purchase shares around $6 each. Not only is this common, it is expected. Them buying at full IPO price was certainly symbolic, but so what? Symbolic of faith in the company? Did their buying those shares in any way influence you in what could be described as an ignorant decision to buy into this IPO? Methinks not. I suspect that you are fully capable of making foolish decisions on your own and have quite a history of same.

If someone makes a bad decison they should at least learn from it. Don't go crying that you have been somehow "victimized" in all of this. No one likes soggy tuna. Of course, being a guy I can say that few of us care for big tuna. We like ours small & compact. (c;

Posts: 70 · Full Forum Member Joined: Nov 28, 2005 Posts: 70

czboston wrote:

You know, I have been thinking about the employees who got to be a part of this DSP. They too have lost money. It must be tough for them as they work there. I'm sure morale hasn't been stellar inside the company this week. I hope for all concerned that this will pass.

Trust me, morale was never an issue at Vonage. Why do you thing they advertise Tech Support and Customer service jobe every week? It's not like the stock offering would make a difference, it's just (bad) business as usual for Vonage employees.

I know a lot of my posts have the same tone. If is an issue I'll leave it up to admin.

BTW, next time someone speaks w/someone at Vonage CS or TS, ask how long they've been there. I know Vonage is a relatively new Company, but you'll rarely get someone with a year experience.

Posts: 75 · Vonage Forum Senior Joined: Jun 01, 2006 Posts: 75

ckudrna wrote:

what? What do you mean he paid pennies? He started the company. He has contributed millions in capital and lots of work into the company. Vonage did not just sell Citron shares for real cheap, he has always had a huge equity position in the company. Once the company went public it provided him nothing more than a venue to cash out by selling. Just because it is a public company now does not mean that he just all of a sudden got a large equity position. You can have equity ownership in a company without a stock trading publicly...............

The 100 shares is tradition. Nothing more. There is no use in trying to accuse him of doing something that is so awful because he bought just 100 shares on opening day. He has a lot more of his wealth tied up in VG than you do.

Have you ever worked at a startup? If not, let me tell you how this really works. When a company starts up, the founder(s) usually pony up enough cash (or borrow it from friends) to hire a small initial team and keep the company going until they can raise some real money (generally tens to a couple hundred million from venture capital firms). The early employees in a company usually take a risk themselves (a lower salary in exchange for stock options). Those options are continually repriced based upon the value of the company. When the company starts, it has basically no value. Therefore, those early shares are priced ridiculously low (pennies per share). When an employee exercises (purchases) their options, they buy them at the price that it was set at when the options were awarded.

The venture capital firms also take a gamble. They fund the company in exchange for stock. They also buy their shares at a very low rate ($1 - $2 per share).

As the company grows, new employees also have the option to purchase shares, but their strike price tends to be higher and they generally get fewer shares than the really early employees (the strike price rises as the value of the company - generally set by a third party accounting firm - rises. Also, later employees are not taking as big of a risk because the company is already established). The early employees generally also get new options as part of their annual compensation package, but the price of those shares changes as the company grows (i.e. your first strike price may have been pennies per share, then a year later it was $1 per share, then 2 years later it might be $5 per share).

So yes, Citron probably has a few million of his own money tied up in the company, but he stands to make around $150 million when he sells. Not a bad deal. You didn't honestly think he paid $17/share for all of his shares, did you?

And yes, I agree that the 100 shares he did buy at $17 was purely symbolic. It's a stupid tradition - really more of a superstition than anything else.

Posts: 16 · Vonage Forum Associate Joined: May 31, 2006 Posts: 16

[quote="fanninja"]

ckudrna wrote:

what? What do you mean he paid pennies? He started the company. <snip>.

Great post. Feel free to dispense wisdom to others as necessary!