4 ms·
If netflix doesn’t pay a dividend, does a P/E analysis still make any sense?
by brown9-2 9y ago
If netflix doesn’t pay a dividend, does a P/E analysis still make any sense?
- brucephillips 9y agoYes. Any public company must ultimately pay a dividend to be valuable. Edit: All of my responders are ignoring my use of "ultimately". A company can certainly invest in growth, but growth only matters if the company eventually returns money to shareholders, and the only way to do that is a dividend.
- edpichler 9y agoNo, as I explained up here. It can use the money to grow.
- plaguuuuuu 9y agoif there's no expectation of dividends ever being paid, the share price should be 0
- edpichler 9y agoAlso, some companies pay dividends, and after make loans to the bank (paying interests), to do investments.
- 1stranger 9y agoFalse. Berkshire Hathaway has no dividend.
- tonyztan 9y agoBerkshire Hathaway (Warren Buffet's company) is valuable yet does not pay dividends. https://www.investopedia.com/ask/answers/021615/why-doesnt-berkshire-hathaway-pay-dividend.asp https://www.investopedia.com/ask/answers/021615/why-doesnt-b...
- testfoobar 9y agoNot true - another way to return money to shareholders is to buy back their own stock. https://www.bloomberg.com/quicktake/buybacks-dividends https://www.bloomberg.com/quicktake/buybacks-dividends
- edpichler 9y agoFor sure, dividends donesn't mean nothing here. If a company is profitable and don't pay dividends to shareholders, they need to do something with the money that are accumulating, and they will invest on the company (new machines, products, services, etc. all accordingly with the company strategy), and if the company grows with this investments, the stock price will follows it.
- iamgopal 9y agoHow stock price follow it ? In a hypothetical scenario, if company declare not to pay any dividend any time in the future, nobody will invest in it no matter what.
- edpichler 9y agoBecause the money is on the bank, and it's shareholders property. The shareholders can change the administration council and hire people that will use the accumulated money to make more money, or use it paying dividends. The shareholders are the bosses, and chooses who occupies the administration council. I don't know if my hypothetical example was clear.
- repsilat 9y agoIf the company is closely held the shareholders may not be able to meaningfully affect the composition of the board of directors, and so may not be able to extract any value from it except in bankruptcy.
- laichzeit0 9y agoReally? Bitcoin pays no dividend and people buy it, even though at this point it's basically as useless as a stock that pays no dividend. I say this as a Bitcoin holder who does nothing with his Bitcoin because it's too slow and the transaction fees are too high.