"The most recent investors would not have bought the stock if they had assumed that their investment would be worth less in the future," This is true. "theref

"The most recent investors would not have bought the stock if they had assumed that their investment would be worth less in the future," This is true. "therefore, yes, they are valuing the company at $80bil or whatever the number is." But this does not follow. They are valuing their investment at the price they paid. They aren't (necessarily) valuing the rest of the company at all. For instance, they could believe that Facebook's total value will crash to nothing in the next couple of years, but that (due to demand for Facebook stock) they will be able to make a 500% profit by selling off their investment beforehand. That's an extreme example, but illustrates a problem with extrapolating a company's value from the sale of a small percentage. I'm sure others have studied this, but intuitively something like a rolling average seems to make more sense for that sort of extrapolation.