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It doesn't matter if a company isn't making a profit. It still has assets - whether physical, intellectual, goodwill, brand, or anything else. If you own stocks
by paxy 9y ago
It doesn't matter if a company isn't making a profit. It still has assets - whether physical, intellectual, goodwill, brand, or anything else. If you own stocks in a company you literally own a part of all of these.
- ravingraven 9y agoThat would mean that the value of the stock would be decoupled from financial success of the company, which is clearly not the case. A company with very few assets and record profits every quarter will have an expensive stock price.
- goldbeck 9y agoOne wonders what they're doing with all those profits then. Seems like they would either reinvest in the company (accumulating assets), put it in the bank (fairly literally accumulating assets), or pay it out to shareholders (perhaps the most straightforward way in which stocks are worth money).
- Cakez0r 9y agoA company may also have debts that outweigh the value of their assets.