What is the market value of a company? Investors
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Posted On: 01/07/2019 12:50:05 PM
What is the market value of a company? Investors perception of the value of a company and what they are willing to pay for it at any given moment.
Some suggest a reduction of 1.4 billion shares by the CEO will not have an effect on the share price. The market value of the company is the number of shares times the current share price. At $.0027 per share x 4,500,000,000 shares = a market value of $12,150,000. When the number of shares is reduced by 1.4 Billion to 3.1 B, they will be correct for a brief moment as the market value will drop to $8,370,000 (3.1 billion x $.0027).
However, as investors realize they now own a larger percentage of the company than they had prior to the reduction and new investors realize they can buy a larger percentage of the company for the same amount, the share price will increase. If someone owned 31 million shares prior to the reduction, they would have owned .69% of the company (31M/4.5B). After the reduction, they would now own 1% of the company (31M/3.1B) With a smaller amount of outstanding shares all earnings are divided by a smaller number of shares thus increasing the Earning Per Share and making each share more valuable.
By the numbers, one could say the share price should automatically jump from $.0027 to $.0039 per share as the original $12,150,000 market value is now divided by 3.1 B shares instead of 4.5 B. However, I say there is no limit on how high the share price can go due to the psychological boost created by a CEO finally delivering on a promise he made a couple of years ago. As the CEO keeps delivering, the ball starts rolling downhill, DE debt paid off, share reduction, name change to HEXA, Private Labels being revealed, increased sales, the momentum should continue.
Nobody can accurately predict how high the share price can go but I do feel confident it will go up when the reduction takes place. However, I must put a disclaimer on this, as I was wrong one time back in the 5th grade so I can't be 100% certain. Good luck to all...
Some suggest a reduction of 1.4 billion shares by the CEO will not have an effect on the share price. The market value of the company is the number of shares times the current share price. At $.0027 per share x 4,500,000,000 shares = a market value of $12,150,000. When the number of shares is reduced by 1.4 Billion to 3.1 B, they will be correct for a brief moment as the market value will drop to $8,370,000 (3.1 billion x $.0027).
However, as investors realize they now own a larger percentage of the company than they had prior to the reduction and new investors realize they can buy a larger percentage of the company for the same amount, the share price will increase. If someone owned 31 million shares prior to the reduction, they would have owned .69% of the company (31M/4.5B). After the reduction, they would now own 1% of the company (31M/3.1B) With a smaller amount of outstanding shares all earnings are divided by a smaller number of shares thus increasing the Earning Per Share and making each share more valuable.
By the numbers, one could say the share price should automatically jump from $.0027 to $.0039 per share as the original $12,150,000 market value is now divided by 3.1 B shares instead of 4.5 B. However, I say there is no limit on how high the share price can go due to the psychological boost created by a CEO finally delivering on a promise he made a couple of years ago. As the CEO keeps delivering, the ball starts rolling downhill, DE debt paid off, share reduction, name change to HEXA, Private Labels being revealed, increased sales, the momentum should continue.
Nobody can accurately predict how high the share price can go but I do feel confident it will go up when the reduction takes place. However, I must put a disclaimer on this, as I was wrong one time back in the 5th grade so I can't be 100% certain. Good luck to all...
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