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/biz/ - Business & Finance

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19526135 No.19526135 [Reply] [Original]

What is the intrinsic value of a stock which pays no dividend? Isn't it basically equivalent to tulips?

>> No.19526152

What a beautiful mother and daughter, my heart!!!

>> No.19526170
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19526170

>>19526135
"VOTING RIGHTS"

>> No.19526215

>>19526135
No. A stock is simply a measure of the value of a company. It encompasses the combined values of previous profits, assets the company owns, liabilities the company has, as well as a bit of speculation on future profits. A stock is a real thing, it is a tangible certificate of ownership of a portion of a real company.

>> No.19526241

>>19526215
But you can't do shit with the certificate, it's literally a participation trophy. It isn't backed by anything, it doesn't entitle you to ownership of the company's goods or stores or anything

>> No.19526253

>>19526215
Further more, a dividend stock isnt necessarily any more "real" or "valuable" than a regular stock. It is just proof that a company makes more money than it can use to reinvest. Typically nondividend stocks make up for this by having larger growth percentages, i.e. not having money left over, all funds are allocated to growth. Stocks typically arent tullip tier unless they are like penny stocks or stocks of companies about to bankrupt.

>> No.19526259

it's all a ponzi scheme

>> No.19526334

>>19526241
It is backed by the value of the company lol. Imagine you owned 1 share of coke at 100 bucks. And tomorrow everybody working for coke was like "we dont want to exist anymore". All of cokes assets would then be sold to pay you the cash amount of what the stocks value was, with whatever being leftover after shareholders are paid going to banks and debtors.

Generally, companies and their stocks arent drastically over/undervalued, only slightly which is why a chart creates a series of up and down values as opposed to a perfectly linear increase or decrease.

>> No.19526359

>>19526241
And yes, youre right, owning a company stock doesnt entitle you to the company's goods, but neither does being the ceo/owner/etc. If you were to commandeer company goods for yourself, you open yourself up to what is called "piercing the corporate veil" and the company being used as a persona rather than a separate entity

>> No.19526606

>>19526334
lolz are you this dumb to think you would get paid back?

>> No.19527191

>>19526135
stocks either pay dividends in the future, get acquired (shareholders get bought out), or go bankrupt

that is what the stock price is tied to as t approaches infinity

>> No.19527405

>>19526135
A businesses Assets are funded by Liabilities and Equity. Book Value is what you get from Assets - Liabilities, which equals Equity, the "residual" left to owners.

In the event the business ceases operations, and decides to liquidate (or sell for cash) its Assets, it will use that cash to first pay off its Liabilities, the remainder goes to Equity holders.

Dividends (or Free Cash Flow to Equity) come into the valuing picture when you do something like calculate the Present Value of a stock by discounting the expected future dividends/free cash flows to arrive at how much they should be worth today. Think of discounting as the reverse of using a compound rate. WACC is a type of model used to calculate a discount rate.

>> No.19527418

>>19527405
*A business's Assets

>> No.19527430

>>19526135
imagine you had a company that earned a billion dollars every month, but every month you also spent that much buying new equipment and expanding territory. do you think somebody would pay you for that business?

even though that cash flow isn't avaible for you now, you could redirect the firehose at anytime.

>> No.19527478

>>19526606
If the company bankrupts, no you would not get paid back first. The banks and debtors would. If a company decides to stop existing and sell out their assets, the order of priority are bonds, stockholders, then debtors

>> No.19527540

>>19526135
Its future dividends.

>> No.19527833
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19527833

As Robert Shiller has put it, the real value is that one would hope to eventually expect dividends. Amazon may not have dividends now but the underlying value to shareholders is that one day they will. Of course, there are investors who hope to just sell at a higher price. Share price may be inflated but there is an underlying value for you to decide.

>> No.19527857

>>19526334
>whatever being leftover after shareholders are paid going to banks and debtors.
Thats where you are wrong. Banks and debtors get dibs long before you get yours. Stock holders literally go last.

>> No.19528898

>>19526215
Brainlet
The stock market can decouple from fundamentals easily

>> No.19529335

>>19526135
Theres no difference. Divi paying stocks take money out of their market cap (ex divi date) and distribute while non divi paying stocks just accumulate. You could simply sell some of your non divi paying stocks each year and the performance is equal