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I'm looking at $TOST 10k.

When I go to page 140 it says this for their stock options:

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So you can see from the above image that they say their weighted average fair value of common stock was $17 at the end of Dec. 2021. However the stock price of $TOST was $34 on 31st Dec. 2021.

So where do they get this $17 number from? Shouldn't this just be the market price of $TOST equity? Clearly it's not and I don't understand how they got this number. I know that they got the option price fair value using black scholes but this $17 value for the common stock doesn't make sense to me.

Also, how did it rise from $3.23 in Dec. 2020 to $17 just a year later? That's a massive increase.

EDIT:

D Stanley pointed out in the comments that it's a weighted average of FY 2021 maybe. However it's not likely because on page 121 it says this:

In consideration for the acquisition of xtraCHEF, we issued 569,400 shares of common stock to the seller shareholders with a fair value of $26.10 per share on the acquisition date supported by a contemporaneous valuation

Aquistion of xtraCHEF was in June 2021.

So their Share Price was worth $26.10 in June 2021. So to have a weighted average of $17 in FY 2021 then the share price must have been something like $5 at the start of FY 2021. None of this makes any sense. How can a companies stock price almost 10x in less than 6 months? Very weird and unlikely.

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  • I've also sent an email to $TOST IR but who knows if they will ever respond as most companies do not.
    – Martin Dawson
    Mar 31, 2022 at 12:38
  • I don't have a definitive answer, but the "weighted average" makes me think that it's an average over the period, not a point-in-time value. Since the company went public in the middle of 2021, it's hard to say for sure. Are you just curious or is this causing some valuation problem for you?
    – D Stanley
    Mar 31, 2022 at 14:06
  • @DStanley Weighted Average doesn't make sense though because at no point was their stock close to $17 in FY2021. It's more of a learning thing for me which is why I'm asking it. As I understand the rest of the black scholes model but not this specific line item.
    – Martin Dawson
    Mar 31, 2022 at 16:50
  • They want public in October, 2021 - how do you know what the private stock was worth before that?
    – D Stanley
    Mar 31, 2022 at 16:52
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    The weighing seems to be have been done with number of shares at the time they were issued, and the ipo has, as you mentioned, inflated (or corrected) the stock price (that was previously just set/guessed by management). So that 17$ is probably something like "gave 1.000.000 options when the (self-defined) stock price was 2$ and gave 500.000 options when the post-ipo stock price was 47$". The 17$ also conincide with the value "Weighted Average Exercise Price of the options granted in 2021" in the other table on the same page, so I guess there is a connection.
    – Solarflare
    Apr 1, 2022 at 11:13

1 Answer 1

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Short answer is these stock prices are grant date price.

Stock based compensation are reported at their fair value at grant date. This table lists the key assumptions going into that calculation, one of which is the underlying stock price as of valuation date. In other words $17 is not the average of the company stock price over this 12 month period but over the various option grant dates, weighted by $.

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