Stock shares question

Grim/Don

Grim/Don

Joined
Feb 1, 2003
Messages
1,221
Don't know much about stocks, so...

Couple years ago, my company gave us 200 shares of stock in lieu of a bonus. (They were at $27 and change) most everyone in my office sold when it got up to $30/31 and I think I was the only one left at $33.

Since I hadn't sold, I decided to hold on to them. They got up to $43 earlier this year, then the company announced a 3-2 split. After that, the quote dropped to $28/29...

(so I was thinking I got screwed... I had a couple grand worth (200 * $43)-(200 * $27) and now I had (300 * $29)- (300 *$27)

My supervisor explained it like this: take the initial 200 * $27 and subtract that from the current 300 * $29. I'm not sure if this is correct, or since the listing value went down, then the offer value also went down; keeping the total valuation about the same

Help please, I'm confused! :confused:
 
200@$27=$5400
200@$43=$8600

300@$29=$8700

$8700(current value)-$5400(start value)=$3300 profit (which is taxable if you sell it)

Syn
 
No you didn't get screwed! As Synthesist point out you are now UP money.
 
Most companies at one point or another split stocks. The logic is that although the price initially may drop you in essence own more stocks that again will increase in value.

View stocks as long term investment. If your company is solid they will increase in value tremendous and will probably split again. In the long term future you may actually have quite a nest egg. After all that is how the Microsoft boys became millionaires...stock splits...:thumbup::thumbup:
 
synthesist has it right.

You were given 200 shares at a value of $27 per, for a value of $5400.

The company split the stock at 3:2, which means you now have 300 shares. The value of your "new" 300 shares would have been equal to the value of your "old" 200 shares at the time of the split. You neither lose nor gain on the split.

Your cost basis of the shares would be $5400 / 300 or $18 per share.

So if you were to sell at $29 per share, that would be an $11 per share gain.

This was a stock grant? Did you have to pay taxes on the stock's initial value? If so, the profit (sale price less the cost basis) would be taxable.
 
Nope, didn't have to pay for them, they were given in lieu of a cash bonus. Company has been doing exceptionally well this year and instead of a stock bonus we got checks this year. (Last year we got checks too, but these will be about double last year)

Company is WMS Gamimg; we make the slot machines for the casino's.

I figure I'll hold on to the stock until I have a dire need... I'm glad I kept it while everyone else was selling.

Thanks to everyone for confirming their value... My supervisor can be scatterbrained sometimes...
 
Grim/Don said:
Nope, didn't have to pay for them, they were given in lieu of a cash bonus. Company has been doing exceptionally well this year and instead of a stock bonus we got checks this year. (Last year we got checks too, but these will be about double last year)

Company is WMS Gamimg; we make the slot machines for the casino's.

I figure I'll hold on to the stock until I have a dire need... I'm glad I kept it while everyone else was selling.

Thanks to everyone for confirming their value... My supervisor can be scatterbrained sometimes...
Click to expand...

Make sure they were shares and not options for shares. Options can expire, so you want to cash them in sometime before they expire.

Sometimes you can have a set up where some of your profits auto pay the taxes owed (if you make a gain). If you cash out late in the tax year, that might be the easiest way to go, but if it is in the early part of the year; you might consider taking the whole amount and investing in something else fairly liquid until the end of the year. It all depends on how much cash you are talking about once you get to sell. ;)
 
Clarify if you have stock or stock options, ditto on advice options can expire.

I used to work for a company that gave out stock options as you describe. Then the executive team bet against the company that the price would go down, which when that news came out, it did. :mad: They made a bundle, our options were worthless.

If you have any concerns about management you may want to consider cashing out and reinvesting, though you would take a capital gains hit.
 
Thanks for all the advice! I've been telling a coworker that there's experts from many different fields frequenting these boards.

I've sent an email to our HR dept to verify the shares/options and find out how to check value/balance. Also, to see if I can set up a payroll deduction to purchase more.

Thanks again.:thumbup:
 
Talked to HR and they hooked me up with Smith Barney, the account administrator. They ARE stock options, but they don't expire until 2014. They also explained to me that the stock split 3 for 2, and therefore the initial offer price was cut by 2/3's. When I check my account I have 300 shares at ~$19 (instead of 200 at ~$27)

Either way, I didn't get shafted by the split.Alas, we don't have an employee purchase plan set up, I'd have to go through a broker to do it (which is more work than I'm interested in.

Thanks for your help.
 
Or just do it yourself on line. You already know what you want to buy so the hard part is already done.
 
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