Cloudera Stock Review

Cloudera recently announced that it would be offering its stock for sale, with some to be offered by existing shareholders and the remaining to be offered by the company. There are reports that up to US$ 175 million would be offered for sale, and since its announcement, Cloudera’s shares have been down 6.2 percent to US$17.32. It is worthy of note that Cloudera only recently went public in April this year (2017).

For those who do not know, Cloudera is a software company based in the United States, with core product offerings in Apache Handoop based software, support and services and training to business customers. Cloudera has a 100 percent open source Apache hadoop distribution and  the company donates more than 50 percent of its engineering output to maintaining its various Apache – Licensed open source projects (Apache Hive, Apache Avro, Apache Hbase etc).

The company has been operating since 2008, but is still operating at a loss. Cloudera is seen as a company with high potentials and in the coming years it is expected that it would start becoming profitable to investors. It is gathered that the purpose of the stock offering is to pay taxes on stock awards. For those who don’t know, stock awards are a kind of compensation granted to employees of a company as a bonus. The value of the stock awards are tied to the market value of the stock in question, and most time before it can be granted to an employee, he or she must have met a minimum threshold for example minimum number of years or performance.

The implications for a stock award when it comes to tax is quite different for a stock option. A stock option is taxed when the option is exercised whilst stock awards are taxed at the time they are vested, not when sold. Vesting in this sense means the period for which an employee must wait before he can lay claim to the shares, ie fulfil all pre agreed requirements to own the shares.