Yesterday "EU says Broadcom's proposed VMware deal could restrict competition"
Today, stock is up above $125.
Clearly the market believes this merger is happening.
18 replies (most recent on top)
"why does Raghu need to speak out and assure them it will?"
"why would he say anything else as CEO?"
You asked and answered your own question!
Magoo is a knob end and I wouldn't discuss the colour of orange juice with him. No one should base their opinion on what Magoo says, and I doubt anyone does.
" Are you implying that all these institutions you mention have insider knowledge that solidifies their belief the deal will still go through?"
Do the top two owners, billionaires Ichann and Dell, have insider knowledge of the deal going through? No, I doubt anyone outside of those regulatory agencies have insider knowledge of the deal. That being said, I don't think those two are stupid, and I don't think they are throwing their money away. I don't think they have certainty, I think they have confidence. What more can you reasonably ask for?
"Did they all truly anticipate the deal to face this much regulatory scrutiny?"
I think so. They did set a date well in advance after all. In May of 22 they set their acquisition target date to be October of 23. I think they set it so far out to give time to regulators.
"Sure, it might be a display of their confidence, but does that mean they are right?"
Not necessarily, of course. They can't see the future anymore than we can. That being said, they do have a lot more information then any of us do. Sometimes it makes sense to follow the leader, and I think this is one of those times.
I've also heard, every time a bell rings...Raghu gets a new wrinkly shirt
If investors are so confident the deal will go through, why does Raghu need to speak out and assure them it will?
Also, why would anyone, in their right mind, base their investment strategy on what Raghu says? Even if you respect the man, and think he is smart, why would he say anything else as CEO?
The third option is that the deal stays in limbo for another two years.
Let's say our resident financial expert below is right, and it's not a spurious correlation. So investor confidence means it's most likely going through?
Are you implying that all these institutions you mention have insider knowledge that solidifies their belief the deal will still go through? Did they all truly anticipate the deal to face this much regulatory scrutiny?
Sure, it might be a display of their confidence, but does that mean they are right?
It's not like these institutional investors have never been wrong before, right? snark
Honestly is everyone here without ANY logical understanding?
Agree, OP
It can also be interpreted as meaning that the market sees an increased chance that the acquisition will fail and VMware will be rescued from Broadcom. So who knows. It is all speculation!
Recall 51% of VMW float is owned by M Dell & Silver Lake. This has provided relative stability as they call the shots and await the big pay day.
"This is what we refer to in the biz as a "spurious correlation."
A spurious correlation would be that I stubbed my toe so Scarlett Johansen loves me.
A non-spurious correlation would be that regulators put out news, which the market disbelieves so the price goes up.
Honestly is everyone here without ANY financial understanding? Over 50% of VMware stock is owned by institutions. If these institutional investors thought the regulators were going to block the merger, they would sell their stock. Instead, each time there is a regulatory announcement, the stock goes up in price.
When the Activision/Microsoft merger was in jeopardy, the price of Activision stock fell. Because investors were worried about merger approval. Institutional investors are buying VMware on regulatory news, because they are not worried about approval. See how that works? The market is signalling their belief that the merger will go through.
I question your ability if you think the regulators are looking at the day to day price swings to impact their yes or nay decision. Oh it’s up $1 today so I guess I should vote for the merge to happen lmfao
"Does the stock price impact their decision?" SMH LOL
I was already questioning the ability of the people being hired
It was also very hot weather today, it must be because Magoo did such an amazing interview with the press. 1-2% is noise.
This is what we refer to in the biz as a "spurious correlation."
As if the regulators care what the markets are doing. Does the stock price impact their decision?
"We’re up 1% and the market is up closer to 2%. That is your basis? "
Yes. Markets tend to react to news. Markets reacted to the EU's news by buying more VMware stock.
Today's gain of more than 2% reflects the market's belief that the merger will happen, because the stock would be down if people thought otherwise.
Source: Trust me bro
We’re up 1% and the market is up closer to 2%. That is your basis?