A lot of people here seem to be stuck on this magical $7.65 number. What is actually happening is that you are giving up 100% of your shares. In return you are getting $5.65 for each share plus .2617 shares of a new company, assuming you are in the 97% that are taking the cash election.
Assume I have 1000 shares purchased at today's closing price of $7.18. My investment is worth $7180. Once I relinquish those shares, I will receive $5650 in cash plus 261 shares of New S. Some on here think that those New S shares are going to start trading out of the gate at $7.65. If that were the case then my overall investment value post-merger would be worth $7647 (cash + 261 shares @ $7.65). A 6.5% increase for absolutely no reason.
This situation is no different than with any other stock, the market will determine the value. As of the close today the market determined the value of S to $7.18. Using the logic above, that means that investors are not expecting New S to trade at $7.65. If they did think that then the investing community failed to take advantage of a 6.5% overnight gain. That simply does not happen. Like any stock no one knows for sure what will happen tomorrow but if the market thought that New S will trade at $7.65 tomorrow then there would have been more buying today which would have driven up the price. Instead the price settled at $7.18. Essentially what the market is saying is that one share of old S at $7.18 is equal to $5.65 in cash + .2671 shares of New S at $5.85 (give or take a few cents due to rounding).
I posted the chart below before but here it is again. The left column is old S price and the right column is what New S would have to be priced at in order for your pre-merger investment to equal your post-merger (cash + stock) investment. It doesn't really matter at this point although I thought it was worth while to clarify why I think New S will open around $5.85.
This thread and the New sprint...Doubters thread has been amusing But Billie Idle, Jyicapital and other Knowledgeable investors, lets take about the real issue, making money. Right?? Initially there will be a lot of noise but one of your comments was right on, during the day and afterwards new sprint will trade as most stocks do on earnings, revenue and expected future results both short term and long term. Once the furor of speculation and shakeout occurs, probably first 2 hours, will sprint trade up or down. Should us old sprint investors, with our "stub" (where did the term "stub" come from) sell, buy or hold.. Which will we do.? Do you expect short term up/down, long term up/down. Assuming new sprint opens as we expect, should we buy more, hold or sell. Will new sprint settle up or down in the near term, the long term. Where is the investment money to be made. For those that understand the market and how it operates, these are now the interests and where we should be placing our analytical might..
To start an intellectual discussion, my views are as follows: I expect new sprint to trade up initially and then stabilize about 20 to 40 cents up because of its newness and smaller float and some new institutions buying in, but not the huge gains some think. This is partly because I expect 2nd quarter earnings to be weak because of the costs of iden closing, resulting loss of subscribers , costs of the 2 mergers and residuals from old sprint mistakes. I would not be surprised if they throw in the kitchen sink in right offs to allow new sprint to open clean. So short term, I expect new sprint to be somewhat weak. However, I think the long term story for new sprint is compelling with the advantages of clwr which caused me to buy cler in the first place, the best spectrum position, unlimited data/video, completed LTE and synergies/economies of scale and SBs money and expertise in coming from behind in Japan with the same spectrum frequency. So i'm a buy Thoughts???
I agree and this is what I've been saying all along but some posters on here refuse to believe it (SSELYAPU). Another way to put it is that those shares that you sold IF YOU SELECTED CASH you got paid 7.65 for them per merger agreement. ($5650 in cash received for 739 shares equates to 7.65 per share sale price)