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Not really, gdp is a snapshot of current activity, but the market cap is a guess of the amount of money the company will throw off in total, adjusted for time a
by rileymat2 3y ago
Not really, gdp is a snapshot of current activity, but the market cap is a guess of the amount of money the company will throw off in total, adjusted for time and risk.
- mrtksn 3y agoMarket cap is not that at all, that's why Twitter's market cap was 44B and now undefined because its not on the market. Market cap is the price of the last share trade times total number of shares. Company's current performance and prospects don't really change that much from day to day but you can have large market cap changes because what you are observing is just live betting.
- Jensson 3y ago> what you are observing is just live betting Yes, and those bets are guesses on how much the company will return as the poster you responded to said.
- mrtksn 3y agoNope, each buyer has its own motivations. People usually sell when the price increase to their liking in the casino. Shares are traded all the time, not just on the days of dividend payments day. Tesla so far never paid dividends anyway. Maybe there are people who bought shares and don't trade them and wait for a payout, but if you look at the volumes traded you can easily see that they are a very small minority.
- apwell23 3y ago> volumes traded you can easily see that they are a very small minority. Not sure how volumes traded says anything about buy and hold investors. It could just be a single stock traded a billion times?
- CorrectHorseBat 3y agoPaying dividends is just moving money from the company's bank account to the share owners, it doesn't have anything to do with the value of the rest of the company.
- Jensson 3y agoYou sell when you think the company is overvalued, you buy when you think it is undervalued. Some might treat it as a casino but those are not the big players, as treating it as a casino will most likely lose money and not be profitable.
- JumpCrisscross 3y ago> Twitter's market cap was 44B and now undefined because its not on the market It’s still absolutely on a market, down to being valued and trading. It’s just not on a public market.
- mrtksn 3y agoIt can be true if there are people buying and selling stocks among themselves but that's really out of topic since we are discussing public markets.
- JumpCrisscross 3y ago> that's really out of topic since we are discussing public markets You said the market cap is “undefined.” That is incorrect. Market cap is price per share times shares outstanding. If a company has shares, its market cap is defined by at least one among several metrics.
- mrtksn 3y agoI agree, you are technically correct which is the best kind of correct I guess but it's irrelevant IMHO.
- JumpCrisscross 3y agoIt’s actually fundamentally germane to your argument, since in private markets one doesn’t have “large market cap changes because what you are observing is just live betting.” What input you use as “price” is the relevant bit, with the CNBC reductive convention of price = last trade being the source of your problem, not market cap per se.
- mrtksn 3y agoI see point, maybe I should have been clearer.