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For example, consider an airline company like AIR FRANC KLM.

It doesn't manifest steady growth to support the hope that share price would be higher in the future. At the same time it doesn't pay a dividend. In addition to this, it's prone to risks like CoronaVirus.

And yet, people buy its shares.

This question may be a duplicate of this where the answers suppose that it's because the company will be more valuable in the future (like IT companies).

I see the benefit of buying their shares right now because the company will recover from the Coronavirus and then selling them in the future when the price is stable, I don't see any benefit in buying it. But still, people do?

Am I missing something?

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  • You're conflating two issues - the value of a dividend and the value of a company without steady growth. It makes no sense to invest in a company that isn't growing, regardless of whether it pays a dividend or not. Apr 12 '20 at 13:39
  • There could be many reasons why someone would see value in the company - while there's no obvious long-term growth, the history shows wide fluctuations between 5 and 14. So there are opportunities for return if you don't buy at the peak. That said, there's not a definitive answer for this stock so i'm voting to close as a duplicate,
    – D Stanley
    Apr 12 '20 at 15:03
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Most companies are worth something. In particular, Air France KLM owns about $33 billion of assets (including airplanes worth about $19 billion), and has about $31 billion in liabilities, so if the company wanted to, it could sell all of its assets, pay off all of its liabilities, and distribute the remaining $2 billion to its shareholders. The only reason for the company not to do this is that the directors think they can do something else which will be more lucrative for the shareholders.

Furthermore, the company is profitable: it earned about $450 million in 2018 and about $300 million in 2019. It will probably continue to be profitable in the future. And the company isn't just throwing that money into a hole; that money will be either paid out to shareholders, or reinvested in the hopes of paying out even more money to the shareholders.

So, nobody knows exactly how much Air France KLM stock is worth, but it's definitely worth more than $0.

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