Matt Levine's Last Piece 3 FEB

I hope Matt is just taking a few weeks off and will be back. He is my fave read on Bloomberg, always making me smile and laugh.

His last piece on 3 FEB turns his gaze on FUD (as relates to Safeguard Metals LLC - what a name!), crypto hack of $300 Million at Wormhole and how simple it was to pull off, Cathie Wood and ARK Investment and what makes it different from most other funds which has had huge losses like Ark Investment last year, the Google 20 for 1 split (which is exactly the way I thought, to a “T,” when it was announced) which introduced Bryan Hobart to me, his gotcha look at Elon Musk, and the giant gold cube which showed up in an NYC park with armed guards:

I wrote yesterday about Alphabet Inc.’s stock split, which I characterized as a weird aesthetic appeal to retail investors who want to own a whole share of Google even though 0.1 shares is about 0.1 times as good. A couple of people pointed out that there are in fact practical benefits to having a low nominal stock price. For instance, while many U.S. retail brokers are cool with fractional shares, it is perhaps easier to give employees share-based compensation in whole shares, and so a lower nominal stock price helps.

Another big one is listed options, which ordinarily come in contracts covering 100 shares. Byrne Hobart notes:

“But there’s another constituency that matters: degenerate gamblers who trade options! A single at-the-money call contract for March covers 100 shares of Alphabet with a notional value of $296,000, requires a $12,000 cash outlay right now. … The average Robinhood account has $4,317, which keeps options on high-priced stocks far out of reach. A split makes it easier for Robinhood customers to speculate in options, and options-driven speculation is still growing ($, FT), and has an outsized impact given that options traders must buy the underlying when the stock goes up, while retail options traders have a tendency to respond to gains by buying more options.”

Two years ago if you had asked me “do trillion-dollar companies make corporate finance decisions to appeal to retail options traders” I would have been very confused but now, I mean, who else would you make corporate finance decisions for?