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The market is factoring in that debt. So if Ford magically cancelled out its $160B, its market value would rise significantly. So I guess one could compare its
by prepend 6y ago
The market is factoring in that debt. So if Ford magically cancelled out its $160B, its market value would rise significantly.
So I guess one could compare its post-debt estimated value to this new startup as a upper bound since the startup doesn’t have that debt.
But auto making requires lots of capital so avoiding debt will likely not be possible as the company grows. Although if they keep valuations they can just sell stock and avoid debt.
- piker 6y agoNo. The market only cares about Ford's debt in so much as (1) Fords debt service reduces free cash flow and (1) it threatens a potential bankruptcy that could wipe out equity in the worst case. Sure, cancelling the debt would eliminate the debt service and significantly increase Ford's free cash flow, its market cap should increase, but only if doing so was free.