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>I find it odd that being a big in a large market that isn't growing (like the mobile phone market) is seen as a problem. Why does the company need to grow if i
by oarabbus_ 8y ago
>I find it odd that being a big in a large market that isn't growing (like the mobile phone market) is seen as a problem. Why does the company need to grow if it's profitable as it is?
It's anything but odd. That's the basis of how the stock market works. If Stock XYZ is big in a large, not-growing market, and trades at $50 per share... why would the stock price ever appreciate?
- mikestew 8y agowhy would the stock price ever appreciate? Reinvested dividend money; see a sibling comment somewhere in here that addresses this. If the company doesn't pay a dividend, that money has to go somewhere, so it gets accounted for in the stock price (a vast oversimplification, yes).
- oarabbus_ 8y agoThat was likely my own comment; and it was comparing a company that didn't pay dividends to the exact same company which does pay dividends. In this scenario with equivalent cash flows, expenditures, and expectations of future growth the non-dividend company will have a higher share price. Share price _increases_ however only occur when the market expects the company to _grow_ revenues (profits), not sustain them. In other words, your comment isn't accurate, that would not cause the share price to increase. Only actual growth, expectation of growth, or market manipulation will cause share prices to increase.
- nicoburns 8y ago> why would the stock price ever appreciate? Why should the stock price ever appreciate?
- oarabbus_ 8y agoBecause profits are expected to grow or actually grow. Is this facetious?