Craigslist question?

Question

If craigslist does not have a stock symbol. Then how does eBay have 25% of the equity in craigslist from a former shareholder? Also how do I invest in craigslist?

Answer 1

Privately held companies have shareholders just like any publicly traded company, the obvious difference being that the shares are not available for purchase on the open market. The issuance of shares by a private company simply defines the ownership. Typically, the founder(s) of a privately held company will offer a stake in the business to key executives and long-term employees as an incentive or as a reward for their performance.

In this case, Craig Newmark had given one of his executives, Phillip Knowlton, shares representing 25% of craigslist. Ironically, Newmark (the founder) thought the shares would never have much, if any, value. Normally there would be restrictions on the sale of those shares to outsiders, but an agreement was reached allowing this sale to take place since eBay has essentially promised to allow craigslist to keep operating as a fully autonomous company.

So, eBay bought Knowlton's stake and thereby owns 25% of craigslist's equity.

As for your investing directly in craigslist, at the moment you can't. Your only option would be to buy eBay shares, but craigslist is so small in comparison, and they only have a minority stake, so that wouldn't make much sense at this point. As eBay develops their own online classified business, that could change. Stay tuned.