That's not how simple preferred works. That would be participating preferred. And I'd strongly suspect this is simple preferred, as participating preferred is exceptionally rare for Silicon Valley-type companies (it does happen though).

Investors get either the 1x or convert to common. So the most recent investors will take their 1x ($72mm if public sources are correct, which might include some shares bought by previous investors), but previous investors are likely to convert to common if their price per share of purchase is below the acquisition price. But even in your simple example, the $250mm is only split between founders and team, the shareholders who take their 1x are done prior to that point.

So did the last round of investors lose 1/3rd of their investment (and after waiting four years, too)? Was this a fire sale?

No, usually investors stock is preferred with 1x liquidation preference. This means they get their money back, then the rest is split among other shareholders

Any idea what level/compensation FB is offering to Giphy engineers?

I wonder what happened to employees who joined later on, with underwater options.

Why would any of their options be underwater? Going off of those estimates above, the pot split between shareholders after liquidation preference is 250million. Anyone who has shares is able to cash them out I imagine (how much profit dependent on how many shares someone is granted, which varies obviously but is still a positive net) — unless you’re implying the strike price is less than the share value?

Their last round valued the company at $600MM, so anyone with options at that strike isn't going to make any money.

Only if 409A valuation was at referred price which it almost certainly wasn’t

Not much, I'd imagine. It'd be like getting FB stock options upon joining and having it drop in price when the stock market tanked in March. That's the point of stock.

Presumably they were accelerated/repurchased out for $0? Replaced by ... what exactly? As a giphy employee what do you get out of the acquisiton beyond maybe some job security?

With "later on" in this case being the past four years.