If a convertible note is redeemed in stock, where does the stock come from? Air?
What does the stock price have to do with their $900b commitments to buy products and services from other companies? My creditors don’t care how well I’m doing if I signed contracts. Revenue growth is slowing so how are they going to cover it while bringing loss after loss and their best idea for business is to lose money even faster?
The price of the apple matters because Anthropic is making claims how much they’re worth, based on how well they’re business is doing. If apples are overvalued then everyone is overstating that. And that means the business isn’t doing all that well. Hence, can’t have cake and it eat too.
There’s a reason derivative instrument valuation goes into PnL. It’s not even like counting nominal value of an option contract without physical delivery that some use to exaggerate value of such contracts, these are vanilla convertibles which can explode in their face in multiple ways.
If a convertible note is redeemed in stock, where does the stock come from? Air?
What does the stock price have to do with their $900b commitments to buy products and services from other companies? My creditors don’t care how well I’m doing if I signed contracts. Revenue growth is slowing so how are they going to cover it while bringing loss after loss and their best idea for business is to lose money even faster?
The price of the apple matters because Anthropic is making claims how much they’re worth, based on how well they’re business is doing. If apples are overvalued then everyone is overstating that. And that means the business isn’t doing all that well. Hence, can’t have cake and it eat too.
There’s a reason derivative instrument valuation goes into PnL. It’s not even like counting nominal value of an option contract without physical delivery that some use to exaggerate value of such contracts, these are vanilla convertibles which can explode in their face in multiple ways.