> It is a capital raise. It's right there in the announcement. They are
  > raising new capital, issuing shares, then buying back different shares.

If the transaction completes with the company having the same amount of shares as before, and the same amount of money as before, then it's not a capital raise.

  > But the series I investors are getting a little over 10% of the company
  > for their 6.5B, instead of about 5% for their 6.5B (if the valuation was
  > 120B as suggested).

The valuation is independent of the ownership percentage. If 5% of the company is held by employees (with locked-up RSUs) and 5% held by institutions, then allowing employees to sell their shares to institutions does not change how many shares exist.

Even if the employees decide to sell all of their shares (leaving the external investors with 10%), whether this happens at a 50B or 95B or 120B valuation doesn't affect the percentages. It only affects how much money the employees receive for selling their ownership interest.

  > The existing equity holders as a group are in a position which is about
  > 5% different economically than it could have been

You're still confused about valuation, price, and share count. Issuing new shares directly affects the fair market value of a company, and can be additive (if sold above fair value) or dilutive (if sold below). In contrast, temporary price fluctuations (due to bubbles, panic, etc) do not affect the value of the shares except in very unusual circumstances.