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> Nobody benefits from a company growing indefinite wealth without distributing it to actual people. Isn't this exactly what companies like Apple etc. are doin
by TomVDB 5y ago
> Nobody benefits from a company growing indefinite wealth without distributing it to actual people.
Isn't this exactly what companies like Apple etc. are doing? As it accumulates wealth, the stock price (which is supposed to reflect the value of the company) goes up as well. And thus the shareholders benefit.
- hbosch 5y agoI believe actual cash hoards on hand is considered bad business. Apple having cash on hand is seen as okay, at present, because investors trust them to spend it well on expansion. Remember share price doesn’t indicate how well a company is doing today, it indicates how well people believe it will do In the future. If you have piles of cash and don’t plan on spending it, somehow, on your business then you can’t expect your stock to rise and in fact if you’re so inept that you don’t know how to spend your billions your stock price may actually drop.
- TomVDB 5y agoYou can expect that the market cap will be at least the amount of cash they have, if it’s a profitable company. (This isn’t always the case, but it’s close.) The more cash they gather, the higher the lower bound of the share price.
- IanCal 5y agoWhy would the stock price go up for a company that explicitly did not distribute the money ever to real people? And don't apple pay dividends?
- TomVDB 5y agoCompany A has $X in revenue, $Y in profits, and $0 in cash. Company B has X revenue, Y in profits, and $1T in cash. Which of the two would fetch a higher price in an acquisition?