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People need to stop using the word "worth" as replacement for "market capitalization". Really, whole idea of multiplying stock price with number of stocks to co

People need to stop using the word "worth" as replacement for "market capitalization". Really, whole idea of multiplying stock price with number of stocks to compute "worth" is absurd (if you imagine Apple releasing more stock or buying back all of it, the prices won't change linearly). Ultimately what matters is current revenues and profits not the future estimate of revenues and profits by bunch of casino gamblers. If you just look at revenues, Apple is ahead but by not absurd amounts. For example, AT&T had revenues of $39B while Apple had $53B. The combined revenues of only AT&T and Disney is more than sufficient to beat Apple.

pcurve 8y ago
Market cap is a great representation of what a company is worth. As you pointed out, market cap is share price x outstanding shares. For the case of Apple, it's $1 trillion, which is minimum amount you'd need to pay to buy out Apple. Issuing more stocks or initiating buy back will change stock price, but it won't impact the total market cap. Stock price already reflects fair value of the company's earnings performance and potential.
crazygringo 8y ago
Nope, it makes perfect sense. Current revenues and profits are a drop in the bucket compared to the next 30 years, you should focus mostly on the future. And these aren't casino gamblers, prices are ultimately set by the professionals who analyze this stuff full-time for a living. The market cap is simply the "wisdom of the crowds" who are putting their money where their mouth is. If you have a better way of calculating the worth of companies, then you'll become extremely, extremely, extremely rich. Good luck.
- Aeolun 8y ago
  Based on the stock plans available to me, I’d say the professionals are actually a worse choice than random guessing.
jameshart 8y ago
Apple’s shareholders have, collectively, decided that they would rather hold Apple stock than have a trillion of today’s dollars shared between them. A trillion dollars with which they could do all sorts of other things. But no, they would rather own a slice of the future of apple. To the question, ‘which would you rather have: a trillion US dollars cash, or ownership of apple?’, the market has said ‘apple’ So... yes, that is what apple’s ‘worth’.
- deleted 8y ago
  [deleted]

pcurve 8y ago

Market cap is a great representation of what a company is worth. As you pointed out, market cap is share price x outstanding shares. For the case of Apple, it's $1 trillion, which is minimum amount you'd need to pay to buy out Apple. Issuing more stocks or initiating buy back will change stock price, but it won't impact the total market cap. Stock price already reflects fair value of the company's earnings performance and potential.

crazygringo 8y ago

Nope, it makes perfect sense. Current revenues and profits are a drop in the bucket compared to the next 30 years, you should focus mostly on the future. And these aren't casino gamblers, prices are ultimately set by the professionals who analyze this stuff full-time for a living. The market cap is simply the "wisdom of the crowds" who are putting their money where their mouth is. If you have a better way of calculating the worth of companies, then you'll become extremely, extremely, extremely rich. Good luck.

Aeolun 8y ago
Based on the stock plans available to me, I’d say the professionals are actually a worse choice than random guessing.

jameshart 8y ago

Apple’s shareholders have, collectively, decided that they would rather hold Apple stock than have a trillion of today’s dollars shared between them. A trillion dollars with which they could do all sorts of other things. But no, they would rather own a slice of the future of apple. To the question, ‘which would you rather have: a trillion US dollars cash, or ownership of apple?’, the market has said ‘apple’ So... yes, that is what apple’s ‘worth’.

deleted 8y ago
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