Market value, also known as market capitalization, is the fair value of a public company’s common equity. It can be expressed as a standalone metric or on a scale. The market value of equity is the total dollar value of a company’s equity, calculated by multiplying the current stock price by total outstanding shares. Book value per share is calculated by dividing the company’s equity by the total number of outstanding shares. Market value per share is calculated by considering the market value of a company divided by the total number of outstanding equity shares.
Market value is the total value given by the investment community to a business. To calculate this market value, multiply the current market price of a company by the total number of outstanding shares. Book value, derived from balance sheet equity, offers a less volatile valuation. To determine a company’s OMV, multiply the total number of outstanding shares by the current share price.
Market value is the price an asset would fetch in the market, based on the price that buyers are willing to pay and sellers are willing to accept. There are several ways to calculate the market value of a company, including by stock price, sales multiples, and comparisons. To calculate the company’s market value, simply multiply the current stock price by the number of outstanding shares. Financial experts can calculate market cap by taking the number of a company’s outstanding shares and multiplying it by the current share price.
Market capitalization, which is also the current market value of the company, can be calculated by multiplying the total number of shares in the secondary market with the current price of each company stock.
| Article | Description | Site |
|---|---|---|
| Market Value of Equity | Formula + Calculator | The formula to calculate the market value of equity is the market value per share multiplied by the total number of diluted shares outstanding. | wallstreetprep.com |
| Market Value – Overview, How To Express, How To Calculate | Market Value per Share: It is calculated by considering the market value of a company divided by the total number of outstanding shares. | corporatefinanceinstitute.com |
| What Is Market Value, and Why Does It Matter to Investors? | … calculated by multiplying the number of outstanding shares by the current share price. Market value is easiest to determine for exchange-traded instruments … | investopedia.com |
📹 How is the Stock Price Determined? Stock Market for Beginners (Part 1) Lumovest
How is the stock price determined? In this video, we’ll explain how the stock price is calculated in simple terms and take you …
How To Calculate Market Capitalization?
Market capitalization, or market cap, represents the total dollar value of a company's outstanding shares and is calculated using the formula: Market Capitalization = Price of Share × Number of Outstanding Shares. To determine a company's market cap, multiply the current share price by the total number of shares available. This metric is essential for evaluating a company's worth in the market, influencing investment decisions, performance comparisons, and liquidity assessments.
Market cap helps categorize companies by size, allowing for the analysis of financial performance relative to peers. For example, if a company has a share price of $100 and 10 million outstanding shares, its market cap would be $1 billion (100 × 10, 000, 000). Understanding market capitalization is crucial for building investment portfolios and assessing company stability. Various types of market cap exist, which can be compared against enterprise value and equity value for a comprehensive financial evaluation. Overall, market cap is an important indicator in the stock market reflecting the company's financial health and market position, providing insights for investors and analysts alike.
What Is The Stock Market Total Value?
In 2023, the total market capitalization of publicly traded companies reached approximately US$111 trillion, a figure that can be assessed through various economic indicators like the Buffett Indicator, which compares the total stock market value to GDP. As of July 1, 2024, the U. S. stock market capitalization was reported at $55. 2 trillion. Historical data shows a significant growth in global equity markets, increasing from US$2. 5 trillion in 1980 to US$111 trillion.
Market capitalization, or market cap, reflects a company's total value based on its outstanding shares, calculated by multiplying the current stock price by the number of outstanding shares. The total value of stocks traded in the U. S. was approximately $44. 3 trillion in 2022. Analysts can determine if the market is overvalued or undervalued through ratios like P/E, P/B, and CAPE. Understanding market capitalization is essential for comparing companies and assessing their value relative to economic indicators such as GDP.
How Do You Calculate The Total Value Of A Stock?
The Price-to-Earnings (P/E) ratio is a key measure of stock value, computed by dividing a stock's current price by its earnings per share (EPS). Active investors assess various metrics to gauge a stock's intrinsic value and contrast it with its market price, while passive investors typically refer to the Price-to-Book (P/B) Ratio. To evaluate a stock's intrinsic value, one must compute future cash flows and determine their present values.
Upon a company's entry into the market, particularly during an initial public offering (IPO), its value is established, and various valuation methods, including P/E ratio, Price/Earnings-to-Growth (PEG) ratio, and free cash flow assessments, are employed.
Moreover, market capitalization is calculated by multiplying the current stock price by the number of outstanding shares, which indicates the total value for equity investors. To derive profit from investing in a stock, one compares the purchase cost with the current value of shares, while tools like price per share calculators assist in evaluating market positions and informed investment decisions.
How Do You Calculate Market Value Per Share?
Market value per share, or equity value per share, is calculated by dividing the market capitalization by the total number of diluted shares outstanding, represented by the formula: Market Value Per Share = Market Capitalization ÷ Total Diluted Shares Outstanding. This figure indicates the current stock price of a company. A good market value per share is beneficial for investors assessing stock prices relative to a company's balance sheet. The price per share can be determined using various calculations that consider factors affecting market price, enabling informed financial decisions.
Generally, market value of equity is calculated using the formula: Market Value of Equity = Current Share Price × Total Outstanding Shares. The market/book ratio allows for comparison between a company's market value and its book value, providing insights into valuation stability. The overall market price per share reflects the current trading price, influenced by company performance and market perception. Furthermore, equity value per share considers enterprise value and net debt.
To summarize, market value per share serves as an essential metric for investors, helping them gauge stock valuation by calculating current share prices against total shares outstanding, thus influencing investment decisions significantly.
How Do You Calculate Total Market Value?
To determine the market value of a public company, investors multiply the number of shares by the stock price. For instance, if Company A has a stock price of $12 per share and one million shares, its market value is $12 million. This measurement, known as market capitalization, reflects the fair value of a company's common equity and can be assessed as a total value or on a per-share basis. The market value of equity is calculated by multiplying the current stock price by the total outstanding shares.
Companies are classified by market cap size, ranging from nano-cap to larger categories. Market value can also be influenced by various valuation multiples, such as price-to-earnings or enterprise value-to-EBITDA. Calculating market value may involve different methods, including the Discounted Cash Flow (DCF) approach. Market value serves as an important metric for equity investors, representing the total investment community's valuation of a business. In summary, market value or market capitalization is determined by multiplying the latest stock price by the number of diluted shares outstanding.
How Do You Calculate Book Value Per Share?
Book Value per Share (BVPS) is a financial metric that represents a company's equity per outstanding share. It is calculated by dividing the total equity available to common shareholders by the number of outstanding shares. BVPS helps investors understand the per-share value of a firm based on its total equity. The formula for BVPS is straightforward: BVPS = Total Common Equity / Number of Shares Outstanding. This calculation reveals the value each share would have if the company were liquidated, with assets distributed after settling all obligations.
For instance, if a company has a total common equity of $1, 000, 000 and 1, 000, 000 shares outstanding, its BVPS would be $1. Additionally, the book-to-market ratio can be derived by dividing the market price per share by the book value per share, providing insight into market valuation relative to book value. Understanding BVPS is important for investors, as it aids in assessing a company's financial health and investment potential. In summary, Book Value per Share is a key indicator for evaluating a firm's underlying value on a per-share basis, guiding investment decisions and financial analysis.
How Do You Calculate Market Value Of Equity?
The market value of equity, commonly known as market capitalization, is determined by multiplying the company’s current stock price by the total number of diluted shares outstanding. This formula can be expressed as: Market Value of Equity = Market Price per Share × Total Diluted Shares Outstanding. Market capitalization reflects the total dollar value attributed to a company's equity by investors, and it is subject to fluctuation based on changes in stock prices and total shares available.
To derive the equity value from enterprise value, it is essential to subtract net debt. For publicly traded companies, the market value of equity is easily accessible through share prices, whereas for private companies, it represents the market's perception and is similarly computed. Market value reflects market sentiment, with the calculation involving the current market price of shares and outstanding shares. In contrast, book value, based on balance sheet equity, typically exhibits less volatility.
Therefore, the market value of equity essentially represents the investment community's appraisal of a company's worth at any point in time. Understanding this formula is crucial for analyzing a company’s financial health and market position.
What Is An Example Of Total Market Value?
Market value of a company represents the total worth of all its shares available in the market. For instance, if XYZ App has 50, 000 shares trading at $75 each, its market value would be $3. 75 million. This metric reflects an asset's expected price in an open, competitive market and is rooted in the principles of supply and demand. The formula to calculate market value (MV) is MV = stock price x number of outstanding shares. This financial indicator serves as an estimate of a company's perceived worth to market participants.
Market value encompasses equity, securities, or other investments' trading price in competitive settings. It's influenced by various factors, including investor valuations and pricing multiples such as price-to-earnings ratios. Market capitalisation, particularly for publicly traded companies, defines their market value based on current prices and shares. For example, the market value of equity is derived by multiplying the stock price by total outstanding shares.
The U. S. stock market's total capitalization was $55. 2 trillion as of July 1, 2024. Overall, market value is crucial in determining an asset's worth, established through the interaction of willing buyers and sellers.
How Do You Calculate A Company'S Market Cap?
Market capitalization (market cap) measures the total value of a company's common equity at the latest market closing date. It is calculated by multiplying the total number of diluted outstanding shares by the current market price per share. This metric represents the company's overall market value, providing a quick reference to its size and financial stability. Simply put, market cap is determined by the formula: Market cap = Number of outstanding shares × Price per share.
For example, if a company has 10 million shares trading at $50 each, its market cap would be 10 million × $50, resulting in $500 million. Market cap serves as an essential tool for comparing the financial performance of different companies and understanding their relative sizes within the market. It encompasses all issued and sold shares, including those held by shareholders. Financial experts extensively utilize market capitalization to assess a company's growth potential and stability.
The calculation process is straightforward: take the current share price and multiply it by the number of outstanding shares. Corporations also monitor fully diluted market cap, which accounts for all potential shares that could be issued, providing a comprehensive view of a company’s valuation.
How Do You Find The Total Value Of Shares?
Market value of equity, synonymous with market capitalization, is calculated by multiplying total outstanding shares by the current price per share. It represents the total dollar value of a company's equity and serves as a crucial metric for investors. To find the market cap, you can use the formula: Market Capitalization = Share Price x Shares Outstanding. If the market cap and share price are known, calculating the number of outstanding shares is straightforward by dividing market capitalization by the share price.
This information can typically be found in the shareholders' equity section of a company's balance sheet. Additionally, the price per share calculator aids in assessing the value of an individual share based on a company's market capitalization and outstanding shares, providing useful data for investment decisions. The market cap fluctuates with stock price changes throughout trading. Understanding a company's equity value is essential for analyzing financial metrics and determining share ownership proportions.
This knowledge is critical for investors to assess potential profits or losses, and tools exist to evaluate investment returns and break-even prices. Lastly, the P/S ratio compares market capitalization to annual revenue, offering another measurement of a company's value.
Where Do You Find Market Value Per Share?
Financial news outlets such as CNBC and Fox Business routinely offer updates on stock prices and market conditions. The market price per share is essential, reflecting collective investor sentiment, economic trends, and company performance. To determine the market value per share, divide the total market value of a business by its outstanding shares. When considering stock purchases, examine the organization’s balance sheet to compare the current share price with the market value per share, aiding in informed investment decisions.
The equity market value is derived from multiplying outstanding shares by the current share price. Influencing factors include earnings, dividends, and market sentiment, while potential profitability can be assessed through the price-to-earnings ratio. The market/book ratio compares a company's market value to its book value.
Market value, representing what the investment community assigns to a firm, can be computed by adjusting enterprise value to exclude non-equity claims. For equity valuation, the formula is Market Value of Equity = Market Price per Share × Total Shares Outstanding. In essence, market value per share indicates the trade price for a stock, reliant on the company’s earnings, cash flow, and overall prospects.
📹 Enterprise Value and Total Market Value Example
Investing in stocks may appear simple, but selecting the appropriate stock without a proven strategy can be tough. I’ve been trying to develop my $210,000 portfolio for a while, but the biggest hurdle is a lack of a clear entrance and exit strategy. Any feedback on this topic would be greatly welcomed.
I’ve been working hard to save money and contribute to early retirement and financial independence, but the economy has destroyed the majority of my portfolio since the pandemic. I want to know if I should continue to make contributions to my portfolio in these erratic markets or if I should look into other industries.
Although there are many differing views regarding equities and their outlook for the upcoming years, I strive for short-term, steady gains from market corrections, and if I understood a little bit about day trading, I would surely hop on the boat. All I want to do is find the best ways to increase and protect my $390k stagnating reserve from inflation.
More than a collapse in the stock or real estate markets, inflation has a direct impact on people’s standard of living. It’s no surprise that current market sentiment is so negative. To navigate this economy, expert guidance is more crucial than ever. ETFs, stock markets, and the housing sector are all volatile. My $350k portfolio has taken a serious hit.
What you said about unpredictability of major events struck with me. Makes me wonder how this year’s election will contribute to the market growth. I’ve been going hard with my investments this year and have been able to build up to 80k. Are there tips I could apply to help me grow my portfolio even more during this election season and beyond?
I have been a dividend focused investor for a long time. This does not mean I don’t own growth stocks, I do. A well rounded portfolio should be a mixture of both categories. One way to minimize the anxiety out of stock market investing, is to make sure you keep a large cash cushion. I invest in the market, but never put all my money in market.
Stocks extended their year-to-date rally following the CPI report, with the S&P 500 last up 0.8% in afternoon trading. but I don’t know if stocks will quickly rebound, continue to pull back or move sideways for a few weeks, or if conditions will rapidly deteriorate.I am under pressure to grow my reserve of $250k.
Amazing article, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family
I’m trying to get my girlfriend started with investing and she gets fed up when I start babbling about philosophy, understanding P/E ratio, understanding revenue, earnings, eps, ROIC, NOPLAT, dividends and so on… This article was very well put together easily and straightforward explained, with good animations!
Hi Lets say i buy 10 k shares of a company, each worth 10 dollars and are 1 % of the entire company. What happens if the price of the shares go down to lets say 6 dollars each. Am i still getting my 1 % payout from the company profit every year? Another question.. Are the prices for shareholdings completely dependent on how people think the company is gonna perform or is it all about how it actually performs? And lastly can the total amount of shareholdings change in a company and if so does my percentage go down?
How to determine share price from fundamentals like total company cost, bookvalue, every yearly results balancesheet, splits, bonus, dividents, RE RIGHTS ISSUE OF A spsefic SHARE . True value . And then explain market share value as intrusic value or relative strength indicator in comparison to volume / market capitalization . Thank you for nice detailed illustration in short Regards
I think I understand. At 8:42, I can translate that directly to when im trying to buy stock from a brokerage when there’s different types of orders (market, limit). My decision on a specific stock then gets calculated along with many other people’s decision for that same stock and you end up certain transactions going through and certain ones not happening.
I’ve been really, really struggling trying to understand exactly why profitability or potential profitability of a company should have any affect on the stock price in the first place. How are the two tied? For example, when everyone pushed to buy Zoom stocks and ended up accidentally buying stocks from the wrong company it essentially had the same effect as though they just bought stocks in Zoom, right? I mean if this was never resolved and the investors still believed they invested in Zoom, I can’t see how that’s any different to the shareholders (aside from of course the company Zoom itself). It seems rather arbitrary whether or not a company is doing good and only matters on what investors believe other investors will invest in a company which is just circular logic. Everyone could just agree to invest in failing companies and not in successful ones. The way I currently understand it, this should have the same impact on investors…
Awesome article! Loved the explanation on intrinsic value. Quick question: if the strike price is directly affected by supply and demand, and typically a huge ‘selloff’ would result in lower and lower prices (like the beginning of COVID-19), why doesn’t an overwhelming demand to buy influence the price upwards? I have been looking at the buy/sell “level II” market data, and I can see a general huge demand of buy orders recently, with very little quantities priced to sell to meet the demand, yet the strike prices continue to remain stagnant or fall. Thank you!
Hey man. So unless you’re talking about dividends, I’m a little fuzzy on the example in which you say that the excess cash flow for a company finds its way to the shareholders… it didn’t sound like you were implying the ACTUAL price of the stock but rather what it’s future intrinsic value should IMPLY… so in what way does excess cash flow find it’s way to the shareholders? Aren’t their individuals within financial regulatory agencies who have more to do with determining a stocks price at times than the actual supply and demand or float/volume?
Your analysis is very clean and taken right from your econ book, class, MBA program or whatever. It does NOT at ALL take into consideration market makers, banks influence(their manipulation) and even your mutual fund company — that will work AGAINST you ( yes — your account -in their FUNDS) to short- that is done to get the shares OUT OF YOUR HANDS— they DO know the intrinsic value and they ALSO KNOW — investors CAN KNOW this also, SO their GOAL is to PUSH the value DOWN SO HARD that your RESEARCH, time and math that DOES equal a GOOD VALUE— that is YOUR GUIDING LIGHT—- AS YOU BUY at this “so called INTRINSIC VALUE” is NOW FAR above the PRICE the MARKET MAKERS, brokers and BANKS — ALL got THEIR PRICE– that is NOW FAR below — your “INTRINSIC VALUE” PRICE — you —— ALREADY BOUGHT AT! This is a CLASSIC “VALUE TRAP” of a different kind( a technical trap). Now THEY have the “REAL discounted INTRINSIC VALUE”— NOT YOU! TO make it harder on your “FUNDAMENTAL ANALYSIS” they will SELL at a price that is NOT close to your “future based price” ! When they sell— with their MASSIVE NUMBER of shares — as MANY banks and brokers HAVE—– your valuable homework of “intrinsic value: will be of LITTLE VALUE — even OVER TIME – as they SELL– pushing ‘your stock price DOWN— for a LONG Time!!! Thus TRAPPING you — AGAIN — while you WAIT — LONGER and your ALSO valuable investor measurement of —– CAGR — dwindles, as TIME goes by and you wait for that value to come TRUE!
Hello, Suppose price of stocks changed due to people’s thinking how company is going to perform and not due to how it actually performs…in that case does the capital for company changes? Also how stock price changes because of people’s thinking? Can shareholders decides selling or buying price? Please give an example if possible.
Excellent simplified explanation about how the prices are determined, I consider myself pretty ignorant with regards to the intrinsic value factor, super important now that I saw this article, can you create a article just focused on demystifying intrinsic value with a couple of deeper examples, something like using yahoo finance and their profile details on some stock e.g. APPL? Thank you for all your great information and hard work.
This is truly a great and informative article! I have just one question 🙂 If a certain type of stock does not provide dividends, hence not giving back the Free Cash Flow to the shareholders, how does shareholders profit? Is there another way the company’s Free Cash Flow can be shared with the shareholders?
Question: How exactly is intristic value calculated? Free cash flow from the recent year divided by the number of shareholders minus the percent you would like to earn? This cannot be correct haha. Sorry, I just don’t understand how to calculate intristic value and where to find all the data I need in order to calculate it.
Just curious, if a comany share is worth $200 and I only invest $50, did I buy a share or like, a quarter of it? Or is my share worth $50 while someone elses is worth $200 and we make a profit only compared to the value we bought at (so $200 is just our baseline when we bought in with $50)? I understand I’d make more money/lose it if it goes below the initial value of when I bought in, I’m just not sure if you bought shares or part of a share etc. Is there a limit to the amount of shares that can be bought and sold?
Okay so the price of the stock also goes down bcoz the intrusive value estimated by some people varies so for eg. If my intrusive value is 250$ and the other persons is 280$ so he is willing to sell the stock at 290$ but im ready go sell it for 260$ so the buyer will obvio buy frm me … so wil lthis drive the price down of stock?
This is a great article, I only have one question about when the article stated “when you own a stock you are now a business owner” I was under the impression that you are a owner of 100% of the stocks or equities you own in the company and not an actual owner of the business due to “separation of ownership and control”?
Please someone answer this, because the article did not. I put a buy order in for 100 shares with a buy stop let’s say 5 bucks on a stock that was sitting at 4.98 and the stock price like you stated shows that the last sale moved the needle above 5 bucks to 5.02. Where does the new price come from if there are only two other people who put in a limit sell of 100 shares, one at 4.99 and the other at 5.01? My brokerage says that all my limits and stops are not actual asks or bids but market orders and I only get the cheapest still available does lowest price someone is willing to sell at get the new price spot every time. Will it now move to 4.99? At one moment the next sale moved above all our points of entry and exit. The seller who wants 5.01 put his order in a month ago and the seller 4.99 put his in hour ago. Do I have to pay 5.01 or 4.99 a share please explain? Thanks a bunch. Maybe I thought my way through this as I worked out the question. Lol
Ok, i understand many things, apart from Like for example you mentioned that bidding takes place and buyer with 223 dollars will be sold stock and now 223 is the atock price,how does that bidding takes place, when as i open market to buy i can only purchase that stock at lets say 223 dollars, where is the bidding taking place here?
There is something I am missing here. At the beginning of the article you said that the stock price is the price of the last transaction. This means that if I buy 1 Apple share for 200$ and put a sale order at 5000$ then put a buy order at 5000$, I just put the share to a 5k value. I assume that the amount of shares involved in a transaction, related to the total supply, is taken into account. Otherwise anyone can manipulate the market with a couple thousand bucks.
Sir iam a student just out of curiosity i know it may sound a dumb question but how do they return invested money to soo many shareholders i don’t understand i know how stock markets work you get return in investment but how do they return the investment to millions of shareholders isn’t it complicated
If the stock price is the price of latest transaction lets assume the current value is 200$ and two friends A&B for the sake of experimenting does the following: 1. A buys 1 stock at 200$ and tells B that he will bid 400$ to sell 2. B is ready to buy at 400$ and does it. Does that mean momentary the price will go up by 400$ ?
Wait, so if ABC company has a current stock price of 5.20, and I buy 1 share for 52.00, then it makes the stock worth 10 times more? If that was true, then I could buy 1,000 shares for example for 5.20 each. I then buy 1 stock for 52.00. Based on what you’re saying, the stock now becomes 52.00. If that were true, I could then sell the 1,000 shares for 52.00 each, but that’s not what happens. I’m new to the stock market, so I’d like it if more research was done next time.
Is this not only true for dividend-yielding stocks? Say a stock yields no dividend–isn’t it’s intrinsic value 0 since you experience none of the free cash flow? The only money I’d receive for selling the stock is what someone else perceives it to be. And if it yields no dividend and therefore has no intrinsic value are you not just betting that someone else in the future will be less informed than you and buy it from you at a higher price? Are non-dividend-yielding stocks’ prices driven by market psychology or do they have some other factors that give them intrinsic value?
How a company determines how many shares they won. ie, why would company A have 1 million shares and company B has 100 million shares? Just like Apple 4,829,926,000 shares why not 5 billion shares or 1 billion. Also does the amount of shares change in the futures or does stay fixed when the company is established.
Ok. Good article. Ive been searching for a article like this to help me understand how stock prices are determined. Your article helped tremendously. However, i do have a question. In regards to intrinsic value, how does that tie in with what recently happened with Teslas stock? Right after Elon tweeted that Tesla stocks are too high. The prices dropped. How does this happen so quickly? Is this due to people’s perception of the stock and how does that determine the intrinsic value? Please advise. Thank you
Good article but you skipped a lot of factors. Inflation, dividends (not all companies pay dividends, and they’re taxed as well), etc.. Stock market is inherently different from the market where the company trades in. It’s a market of its own. The demand of a share at large determines the price of the share. Also more the number of shares there are in the market for a fixed demand, lesser is the price. It is not impossible that shares are traded below or above what they’re worth. It depends on the situation and the company’s impression on other investors, if you should buy it’s shares or not.
I started buying some more stocks at the beginning of the year, but nothing big. Why am I treating this so harshly? I still want to be the first person in my polygamous family to make a million dollars despite the fact that others in my field make six figures per person. I am well aware of the costs associated with working more to get more money.
Do you know what I mean? (regarding future cashflow for the LIFETIME of the business). I’m only trying to understand this. I’m trying to make sense of it. Right now it makes no sense at all. You should expand a bit on how you determine the number for the LIFETIME of Apple. If it’s a guess, how meaningful and how accurate can your results be. Wouldn’t the results have wide variances depending on whether you used 5 or 500 for the LIFETIME. What am I missing?
I’m still trying to figure out. How my 395 shares from robinhood is suddenly missing on april 12th stock ” mcep” I bought at average .22. Per share Then on april12th I saw that it skyrocketed to 3$plus. And was trying to sell but a notice came up say. This stock. Mcep or mid-con. Is temporarily not tradable so the following day I checked. And shares were missing about 395 of the 415 i purchased. From Robinhood I’m still waiting on a response but nothing yet. Did this happen to anyone else??? I’m beginning to think i got scammed by Robinhood or they are having major site problems ????
We called it the crystal ball class. because you need a crystal ball to determine the future price. you then use this to calculate the intrinsic value of the stock, but wait ! with the crystal ball being a fantasy, like super powers you have to make up a future price. this is not even a guess ! so all your fancy calculations are based on the fallacy that you know the future value; and you don’t and you can’t. you are left somewhere between the fear of loss and the greed of gain.
You lost me at ‘lifetime of Apple’. Future cashflow for the life of the business could not possibly be a meaningful number in determining a stock price. How could you possibly use that number as an important factor in an equation when it could be 1, 5, 50, or 500. So what number did you use confidently for the lifetime of Apple?
How do you know what free cash flow will Apple generate decades from now? Are companies making no free cash flow like utilities wortless and have zero share price? You got it wrong. Share price is determined by earnings today. Also average holding period is 12 months now. Why would people care about lifetime free cash flow of Apple if they buy only for 12 months?
You really cannot explain these things to most people in life. Investors are rare to come by in the real world. The.normal person is brainwashed into stupidity. Does anyone else feel alone in the investment world? Regular people just have excuses its pathetic. It’s like normal people don’t learn anything in 12 years.
I gave it a thumbs down because I want to know how to determine a company’s intrinsic value like for instance why would Chipotle restaurant be worth $900 a share and McDinslds is only worth $30 a share., sure Chip goes down to $400 a share but why would it be worth 14 times the price of McDinalds at $400 dollars a share
This is a nice explanation. Really like it. The intrinsic value is a good concept, however, it seems to be different for each analyst and it seems to depend on their beliefs and emotional factors. The good question here would be, how to eliminate the guesswork. Warren Buffett seems to have cracked it, and all it takes is just common sense and a little reading of financial statements. It’s easier than most people think! Here are some examples of how it’s done for Western Union: youtu.be/Wx3LZ34afFA, or VF Corporation: youtu.be/GwapOOY80HQ