Capitalistic Renaissance 17: A numerical example
The phrase “free customer stock options” may sound too new or foreign. If this is so, then consider the precedent of “free employee stock options” which are granted to a critical number of employees for their invaluable job performance. Note that employee stock options given to a few employees cannot and have not guaranteed sales by public companies. PEV© economics and free customer stock options will guarantee many more sales.
We can financially engineer value for the consumers by finding the optimized relationship between the number of consumers and the number of new public companies. We allocate free shares to consumers so that the equity value to the consumers on the first trading day is greater than their cash purchases.
There is only one Value Creation Formula© (VCF©) for engineering value for public companies. This formula is x=(a*b/y)/c where X is stock price, A is revenue, B is percentage of revenue for earnings, Y is shares outstanding and C is the rate of return that creates equity for the public companies. An optimized value creation system of 14 million customers for 364 new public companies is coming into existence at b2bvp.com† using this formula.
Take as an example, a new public company optimized to sell 14 million widgets. The company’s widgets are annually-priced at $33 with upgrades, services, etc delivered via the internet. Then A is 14 million times $33, B is (+ or -) 63%, Y is 61 million and C is (+ or -) 3%. With these numbers, the Value Creation Formula© calculates a stock price of $159.05. It is the control and changes in the B & C variables that cause the multiples of 3, 5, 11, 20 or over 40 times equity value to be created.
Keep in mind that the A variable annual revenue is predictable with PEV economics whereas today, the revenues of the public companies are basically guess work.
Let’s look at the financial impact to any one of the 14 million consumers. With 46% of outstanding shares (61 million) allocated to 14 million consumers, each consumer owns 2 shares. For spending $33, any one of these consumers receives 2 shares worth $318.10 (or $159.05 * 2). The multiple in this example is 9.64 because $318.10 divided by $33 equals 9.64.
14 million consumers are pre-assembled via the internet into an optimized system where they wait for one of 364 new public company shares to be registered. In a matter of months, 14 million to 154 million Americans can be free of debt.
Then each one of the 364 new public companies comes into existence at b2bvp.com†, 14 million customers and partners are waiting to purchase for cash in unison on the first trading day. These concentrated cash purchases cause the share price of $159.10 in this example.
† a template site designed in 2008 for test-marketing.