Great answers, thank you both
@yachi and
@cangelosibrown. This is exactly how I am thinking about it, too. If it were any stock picked at random, it's worth doing. Given my extensive financial exposure to my employer, is it still worth doing?
The plan caps contributions at $25K annually. Say I max it: I lock up an average of $6,250 across 6 months, and buy $13,157 of stock at the end for $12,500, a discount of $657. That's a 10.5% return on my average investment of $6,250, or a 21% APR. Does this math check out? I feel like people sometimes under-appreciate the value of their ESPPs by not thinking about it as an APR.
The 21% APR would clearly be a no brainer if I could sell within a day or two of purchasing. Since I can't, I am balancing that 21% APR against the risk of price movement against me between when I purchase and when I am allowed to sell my shares.
To your point about risk concentration in my employer: obviously my company pays my salary, and I do also have substantial exposure to their share price through restricted stock, such that any given ESPP purchase is small by comparison to my overall equity stake. That being said, I can also afford to take risk if it's attractively priced. I am in a financially secure position, and most plausible scenarios where I would lose my current job would create a windfall for me.
Does any of this change your advice?