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"In fact, the market thought it was a terrible idea: Our stock promptly lost 80 percent of its value, putting our market cap at about $28 million. It’s worth po
by samd 17y ago
"In fact, the market thought it was a terrible idea: Our stock promptly lost 80 percent of its value, putting our market cap at about $28 million. It’s worth pointing out that this was about $40 million less than the cash that we had in the bank."
Efficient market my ass.
- prodigal_erik 17y agoA rational market has to discount your bank balance by the probability they will ever see their piece of it. It's rare now for a company to wind down in an orderly way, rather than spend all their money trying to recover and then fold.
- deleted 17y ago[deleted]
- hristov 17y agoI agree that the efficient market theory is generally wrong, but this example seems a bit extreme. I am surprised one of the sharks out there did not take over the company to merely shut down everything and get the cash. It could be that Mr. Horowitz was excluding certain privately held shares from the market cap. Or maybe there were liabilities so that while they had 68 million in cash they did not have 68 million in net assets. Or maybe they had a poison pill.
- ghshephard 17y agoIt was a thin market - almost no liquidity. There were days when it was in the 40-50 cent range that I would purchase 5000 shares and see my _actual trade_ move the price of the stock a few cents. Anybody who had actually tried to purchase significant amounts of stock would have quickly brought the price of the stock up north of a dollar. In fact, when the new CFO, Sharlene Abrams came on board, the stock popped up in due course.