As long as the cost is less than what apple makes from the watches annually, it would still be worth it, no?

Sometimes companies have poison pill provisions and similar that makes it veeeeery expensive to do a hostile takeover.

Expensive for Apple? This is a $17 billion annual revenue product category for them.

Masimo's market cap is $6 billion.

> $17 billion annual revenue

Only a proportion of that is net income

> market cap is $6 billion.

Even if > 50% enough stocks are on the market how much do you think Apple would end up paying $12 billion? $16? $20? $25?

How many years would it take them to earn that back?

You can’t really buy companies directly on the stock market, the price will just start going up exponentially.

Also they’d be rewarding patent trolls which creates incentives for other companies to behave the same way so that Apple would acquire them

I guess the consideration wouldn't be the value of whole product category, but related to changes to manufacture/schedule and changes to sales if they dropped that particular feature?

pulse oximeter isn't really an essential feature though. the value to apple is not the total value of the apple watch, it's the marginal difference from what they'd make from selling the watch with that feature disabled in territories where the masimo patent is upheld. which is probably pretty trivial

Why annually?

In addition the float (the freely traded portion of the shares) might be well below what's needed to acquire the majority.

its too expensive (150 per share and going up), apple would need to spend billions

Price per share is meaningless without also saying how many shares there are, in which case you might as well just use the market cap (about 6b, in Masimo’s case).

Why did you use share price and not market cap?

Why do you think 51% of the companies shares are available all at once at exactly slightly above market value? How exactly do you think this trade would get completed?

To those not in the know, a stock ticker looks like a price tag.

When I first started learning about stock markets I got a lot of insight from one comment a friend (who had gone into finance) made to me: the stock market is not a vending machine.

There is no set price to buy shares. If you just want to buy 100 shares at the current ask, it'll probably go through (but even that is no guarantee), but the next 100 shares might well not be available at that price anymore.

> That trade will be complete before the market "sees" you are trying to buy a ton.

That's not how the market works. There are not enough open sell orders at any price (let alone a little above most recent price) for someone to sweep in and buy 51% (or even just a few percent) at once.

As soon as more than a trivial (in the noise) amount of your buys goes through all the open sell orders will start to move up in price (since it's nearly all automated), so you'll be chasing that ever-increasing price a long way up.

And the sell orders will move in a matter of microseconds, right? It's not just automated trading, it's automated high frequency trading, where trading firms employ armies of excellent low-level programmers to shave off clock cycles from the trading algorithms to be the first company to react to market changes.

Yes, it is fun to watch this in the level 2 quotes (although the true high frequency stuff is surely in and out before it has time to show up, I assume). Put an order at the bid or the ask (depending on direction) and move it up or down a penny and watch all the other nearby open orders instantly reshuffle.

Just because you offer to BUY a share over the current bid price doesn't mean there is a share being offered for SALE at that exact time.

For small-time consumers who are buying a few shares here and there - it will appear like there is always some available, but when you are talking about a majority share of the company there isn't that availability sitting there waiting to be just taken.

It’s called slippage - the order book doesn’t have 51% of all the shares immediately for sale at the right this second offer price.

This is 100% not how the stock market works. As soon as the volume increases, people will jump on the trade.

Also companies have an obligation to report once they have accumulated a certain percentage of a company.

That would only work if 51% of the shares had a sell order waiting.

Has this ever happened? Could it theoretically happen?

Yeah if you called up every OTC trade desk and market maker at every investment firm and told them you'd pay 50% above market for 51% of shares of some company.

They'll charge a handsome fee, but they could probably get it done.

That’s kind of what I had in mind, I don’t really know if it’s feasible or not but if I had billions of dollars deposited in my Robinhood account just made the order for that many shares, would it not go through?

Typically this is what you see on a stock:

> Bid [500 x $64.39], [$64.42 x 100] Ask <

It means that someone currently offers to buy 500 shares at the price of $64.39.

It means that someone currently offers to sell 100 shares at the price of $64.42.

In practice, it means that you can buy 100 shares at the price of $64.42, then, after, it will move to the next price level.

=> You can see the "depth" of offers, it's called Level 2 book:

Ask offers:

$64.42 x 100

$64.43 x 200

$64.46 x 100

$65.00 x 600

$97.00 x 100

$999.99 x 100

=> If you try to buy 400 shares, it will cost you:

100 shares x $64.42 = $6 442

200 shares x $64.43 = $12 886

100 shares x $64.46 = $6,446

Divided by 400 shares.

It means ~$64.435 per share, though you saw $64.42 as price.

If you send very large volumes, you quickly eat these price levels.

In our example, if you try to buy 2000 shares, you will get only 1200 shares.

You will have paid an average price of $145.39 per share.

So, yes it may not go through because, it is possible that there are not enough people interested to sell their share (that there is not enough depth, or not at an acceptable price).

And also, the SEC has certain rules (uptick rules, etc) that makes the stock to be frozen in case the price varies too much.

My pleasure :)

There are a finite number of shares - you can only buy what is available for sale. When you log into Robinhood and put in an order as a consumer you are doing it on a small enough scale that you don't see it but every "buy" request gets matched up with someone elses' "sell" request.

When we are talking about a massive % of the total share count there simply isn't that many "sell" requests out there for you to take advantage of.

It would not go through: you can only buy as many shares at once as other people are currently offering at that specified price, which would be negligible compared to the total amount of shares.

The algos will immediately yank the price up as soon as an order that big comes in. On many smaller stocks it’s possible to manipulate the price with less than $100k.