Unless a company is failing, acquisitions should also increase the worth of the company if cash is put in and it's not a pure stock swap. So it's not strange t

Unless a company is failing, acquisitions should also increase the worth of the company if cash is put in and it's not a pure stock swap. So it's not strange that valuations go up after an acquisition, and in my formulation, they would also go up as well, and for the same reason. On the one hand, you're right: if everyone is using misleading valuation calculations, then they're all relatively misleading by the same amount. That still doesn't make these numbers remotely helpful. Here's a thought experiment: Company X sells $10K in equity at a $1 billion valuation, with no revenue. Wow, good for them. Company Y sells $15K in equity at a $1.5 billion valuation with no revenue, and promptly acquires Company X for $1.1 billion in cash and stock. Well color me impressed! That's an amazing exit for Company X! Incredible. Bravo. /sarc It's both easy and cheap to be a paper billionaire when valuations are calculated as shares x 'last price of an individual share'. Anyone can sell their company for $1.1 billion dollars with minimal actual capital changing hands, or value created. FWIW, the real problem isn't the valuation numbers per se, it's when people start talking about "losses". Evernote's stock drops, and somehow they "lost" $600 million in "value". Uh, no, they didn't. They never had that value to begin with, and didn't even lose it. If you think about it, that makes sense. How can a stock sale worth, say, $1000 change the value of the company being sold by $100 million? That doesn't make any sense. With my formulation, selling a single share at a lower price wouldn't move a company's market cap by hundreds of millions of dollars, ever, unless that share somehow was sold at a loss of hundreds of millions of dollars (that's one pricey share!). Instead, it would decrease only be the amount that was lost on that particular share, which is generally minimal in stock sales. My approach is much more stable, and would prevent all of these idiotic headlines about "market drops" that we keep hearing about (and market increases, for that matter). It's just more honest all the way around, and furthermore, it's easy to calculate. You can always track each share's individual purchase history, and trivially calculate the value of the company based on that (and the other factors I mentioned), in real time. It would also prevent the quarterly gaming that goes on, since recent stock sales would not be a major driver for increased (or decreased) valuation. Instead, you'd have to actually improve the company's fundamentals, and as investors and shareholders, isn't that what we really want anyway?