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Well put. The financial system largely exist for the purpose of wealth extraction. Sure, companies use the share market to initially raise capital but what is

Well put. The financial system largely exist for the purpose of wealth extraction. Sure, companies use the share market to initially raise capital but what is the true value of Amazon stock considering they don't issue dividends? Even with a stock that issues dividends how do know that it will happen for years to come? It's all speculation backed by nothing but emotion.

lordnacho 4y ago
The "fundamentals" are used in a kind of Schelling game. If people think no divs means it's worth more, the price will go up.
wefarrell 4y ago
Amazon stock isn’t backed by nothing but emotion. It’s backed by a company that is the largest e-commerce provider and cloud provider.
- CTDOCodebases 4y ago
  So Amazons asset minus liabilities is $420.549B - $276.766B Divide that by the number of shares (shares outstanding for simplicity's sake) is $143.783B / 0.509B This gives us a value of $282.48 per share. Share price at the time of the above figures is $3259.95. So it looks like you might be right. 8.7% of the share price is backed by real world value (assuming the figures are correct) that might be realised for the shareholder some day in the future and the other 91.3% of the share price is hopes and dreams devoid of all emotion. Jokes aside humans cannot predict the future, value is subjective and emotion plays a part in everything we do. So who is anyone to say that something is worth nothing if there is a buyer that is willing to purchase.
s1artibartfast 4y ago
For Amazon, it has value due to partial ownership of the business itself and the cash/assets held by the business. If I own 1% of amazon and it has $100 in the bank, I own $1 of that. This underlies and backs the stock value. Companies also execute stock buybacks, even if they dont offer dividends. Amazon just announced a $10 billion buyback, which is theoretically equivalent to a 1% dividend this year ($1T market cap). If amazon buys back 1% of stocks, I now own 1.01% of the company and $1.01 in that company bank account. https://www.cnbc.com/2022/03/09/amazon-announces-20-for-1-stock-split-10-billion-buyback.html https://www.cnbc.com/2022/03/09/amazon-announces-20-for-1-st...

lordnacho 4y ago

The "fundamentals" are used in a kind of Schelling game. If people think no divs means it's worth more, the price will go up.

wefarrell 4y ago

Amazon stock isn’t backed by nothing but emotion. It’s backed by a company that is the largest e-commerce provider and cloud provider.

CTDOCodebases 4y ago
So Amazons asset minus liabilities is $420.549B - $276.766B Divide that by the number of shares (shares outstanding for simplicity's sake) is $143.783B / 0.509B This gives us a value of $282.48 per share. Share price at the time of the above figures is $3259.95. So it looks like you might be right. 8.7% of the share price is backed by real world value (assuming the figures are correct) that might be realised for the shareholder some day in the future and the other 91.3% of the share price is hopes and dreams devoid of all emotion. Jokes aside humans cannot predict the future, value is subjective and emotion plays a part in everything we do. So who is anyone to say that something is worth nothing if there is a buyer that is willing to purchase.

s1artibartfast 4y ago

For Amazon, it has value due to partial ownership of the business itself and the cash/assets held by the business. If I own 1% of amazon and it has $100 in the bank, I own $1 of that. This underlies and backs the stock value. Companies also execute stock buybacks, even if they dont offer dividends. Amazon just announced a $10 billion buyback, which is theoretically equivalent to a 1% dividend this year ($1T market cap). If amazon buys back 1% of stocks, I now own 1.01% of the company and $1.01 in that company bank account. https://www.cnbc.com/2022/03/09/amazon-announces-20-for-1-stock-split-10-billion-buyback.html https://www.cnbc.com/2022/03/09/amazon-announces-20-for-1-st...