For most companies, the value hits zero when the share price hits zero. When a stock drops from $10 to $5, investors see this as "halfway to zero" and adjust.

For most companies, the value hits zero when the share price hits zero. When a stock drops from $10 to $5, investors see this as "halfway to zero" and adjust. For yahoo, given its valuable holdings, the zero line happens to be somewhere above actual zero (let's just say $10). However, when yahoo drops from $20 to $15 investors are not switching to "halfway to zero" mode. As simple as it sounds, I think the elevated numbers have allowed the market to go too low. The whole thing is very psychologically driven after all.