3 ms·
while stock valuations and expected future profitability are usually correlated (to some extent), if a company isn't paying dividends, wouldn't it be much more
by magicalist 16y ago
while stock valuations and expected future profitability are usually correlated (to some extent), if a company isn't paying dividends, wouldn't it be much more correct to say that stock valuations are derived from the expected future valuations of that same stock?
- dstein 16y agoIt's the same thing. If the company isn't paying dividends the stock price includes whatever dividends the company will pay out in the future. The value of the stock is the total value of all expected future dividends priced in today's dollars. And in Facebook's case investors think (or want you to believe) that the future profits will be pretty big.