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Unless the stock pays a dividend (and a lot of stocks have never paid one), their cashflow never end up in your wallet as a shareholder. Thus the only value you
by AznHisoka 6y ago
Unless the stock pays a dividend (and a lot of stocks have never paid one), their cashflow never end up in your wallet as a shareholder. Thus the only value you will get is the amount someone else will pay for your stock.
Sure they need some cashflow (after all, nobody wants to buy a bankrupt company) but to believe the stock value is a straightforward formula based on cashflows isn’t how the market works. Otherwise Amazon would have plummeted in price long ago.
- qeternity 6y agoBuybacks. The other (and more efficient) method to return capital to shareholders is via buybacks, where the company literally hands you cash in exchange for your shares.
- AznHisoka 6y agoThat is true though again, not every company does buybacks.
- saddlerustle 6y agoA company might not do a dividends or buybacks now, but if they are successful they are likely to do so eventually, and that expectancy is worth something just the same.