Should I sell my RSUs?

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Danimals543
Posts: 70
Joined: Sun Nov 29, 2020 12:54 am

Should I sell my RSUs?

Post by Danimals543 »

I work for a travel booking company (Think Booking, Kayak, Expedia, Priceline, etc). I’m getting 36 shares of the stock and I can choose whether to keep it or sell it immediately. Is it better to wait until travel gets back to normal (I’m guessing the stock will go back up once travel gets back to normal). Would it be good to sell it immediately or if I think the stock would go up to wait? I understand no one has a crystal ball but just wanted to see if anyone else dealt with RSUs.
heilwasser
Posts: 18
Joined: Mon Jan 06, 2020 11:37 pm

Re: Should I sell my RSUs?

Post by heilwasser »

If they gave you $36 in cash instead and the stock was worth $1, would you buy 36 shares? If not, then sell it upon vest and add it to the rest of your portfolio.
Bungo
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Re: Should I sell my RSUs?

Post by Bungo »

I always sell my RSUs upon vesting. Same rationale as given by heilwasser: if someone gave me the equivalent amount of money in cash, would I use it to buy my employer's stock? Of course not. I don't buy individual stocks, and even if I did, I wouldn't want that many eggs in one basket, especially the basket that also pays my salary.

Obviously sometimes this means selling your stock when the price is low, and other times when it's high. Of course, without a crystal ball, you don't know at the time whether the price is low or high, this can only be known in retrospect. On average I've done fine by always selling upon vesting, no regrets whatsoever.

I've had colleagues at other companies who didn't follow this strategy and ended up holding their employer's stock all the way down to zero. Maybe you think this can't happen to your company. But they didn't think it could happen to theirs either.
Last edited by Bungo on Wed Jan 06, 2021 12:58 am, edited 4 times in total.
aarondearu
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Re: Should I sell my RSUs?

Post by aarondearu »

Danimals543 wrote: Wed Jan 06, 2021 12:44 am I work for a travel booking company (Think Booking, Kayak, Expedia, Priceline, etc). I’m getting 36 shares of the stock and I can choose whether to keep it or sell it immediately. Is it better to wait until travel gets back to normal (I’m guessing the stock will go back up once travel gets back to normal).
Expedia stock gained 20% in 2020. It doesn't appear travel stocks are "down".
drumboy256
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Re: Should I sell my RSUs?

Post by drumboy256 »

Always sell.
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Marseille07
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Re: Should I sell my RSUs?

Post by Marseille07 »

Really depends on how much you believe in the company. I don't agree with other posters saying always sell. My RSUs went 3~4x because I didn't sell.
ivgrivchuck
Posts: 554
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Re: Should I sell my RSUs?

Post by ivgrivchuck »

Danimals543 wrote: Wed Jan 06, 2021 12:44 am I work for a travel booking company (Think Booking, Kayak, Expedia, Priceline, etc). I’m getting 36 shares of the stock and I can choose whether to keep it or sell it immediately. Is it better to wait until travel gets back to normal (I’m guessing the stock will go back up once travel gets back to normal). Would it be good to sell it immediately or if I think the stock would go up to wait?
If you had money worth of those 36 shares, would you buy? If yes, keep. If no, sell.

Statistically, it's best to sell immediately.
44% VTI | 36% VXUS | 10% I-bonds | 10% EE-bonds
an00j
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Re: Should I sell my RSUs?

Post by an00j »

It’s not talked about enough, RSUs are simply a way for the company to “finance” paying you for your work. You do work now, they pay you later with stock. Which is not accounted for as an expense, and you get to decide whether to continue financing the company with renumeration...which would otherwise be cash.

Some people like to be paid in RSUs, especially if there’s rapid growth. But most line workers at “stable” companies happily take cash in lieu of RSUs.
toast0
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Location: Puget Sound

Re: Should I sell my RSUs?

Post by toast0 »

an00j wrote: Wed Jan 06, 2021 1:45 am It’s not talked about enough, RSUs are simply a way for the company to “finance” paying you for your work. You do work now, they pay you later with stock. Which is not accounted for as an expense, and you get to decide whether to continue financing the company with renumeration...which would otherwise be cash.
Equity-based compensation certainly does show up in the accounting. At companies I've had RSUs it shows up in the quarterly reports as "Share-based compensation expense". However, the company doesn't have to use as much cash to pay it, depending on how they handle withholding; if they do net share withholding, they usually give you the shares after withholding, pay cash for your side and their side of the withholding amount; if they do automatic same day sell to cover, they only use cash for their side of withholding. Either way, the shares you hold after vesting and withholding magically appeared without the company spending real money.

From the company side, it's a retention plan that aligns with how well the company stock is doing (which hopefully aligns with how well the company is doing). If the company is doing well, they can afford to pay the withholding, and it's effective retention; if the company isn't doing well, the withholding will cost less, and people may leave for greener pastures and forfeit RSUs.
chw
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Re: Should I sell my RSUs?

Post by chw »

The general advice here will be to sell your RSUs upon vesting, and reallocate the proceeds according to your AA. I have followed this advice for 8 years with RSUs granted to me by a mega bank, and have no regrets in hindsight. The last grant would have fallen about 45% in value shortly after selling last year (1/2020), and still not recover to the original sale price as of today.

Basically this is about overcoming behavioral bias towards your company stock to diversify the proceeds more broadly.
Last edited by chw on Wed Jan 06, 2021 7:13 am, edited 1 time in total.
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samsoes
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Re: Should I sell my RSUs?

Post by samsoes »

Sell immediately upon vesting. Always.
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ChowYunPhat
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Re: Should I sell my RSUs?

Post by ChowYunPhat »

Agree with majority of posters to sell RSUs upon vest. If you have a stock purchase program for discount this may come with a mandated holding period but typically RSUs are sellable upon vest. Move the money to your 2-fund or 3-fund portfolio or start one if you don't have a brokerage taxable account. Congrats on the RSUs!

CYP
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Tamarind
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Re: Should I sell my RSUs?

Post by Tamarind »

You should usually sell RSUs immediately, regardless of what industry they are in. You will be taxed on the value as though they had given you cash even if you don't sell. And individual stock in one's employer is riskier than a stock fund and usually doesn't have higher expected return so not recommended.
dcabler
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Re: Should I sell my RSUs?

Post by dcabler »

I always sell RSU's the day they show up in my account.
- I don't own any individual stocks anymore, only index based ETF's and Mutual Funds.
- I don't see the need to add additional risk beyond my paycheck with my employer
- It's free money with almost no risk if you sell it immediately. I just treat it like a bonus.

After selling, I take the proceeds and immediately deposit into my taxable account to buy more of whatever fund is below the target allocation.

Same with stock options (rare these days)
Same with ESPP.
Same with any bonuses.

Rinse & Repeat.
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