What means when investors says the stock trade for less of cash and cash equivalents. Some times they say trades less than book value or assets. Can you make me an example with real stock? How this is calculated? Just take the cash and divide it by shares outstanding?

Thanks a lot


1 Answer 1


This means that the market cap or the enterprise value is less than the company's cash on hand. Article here.

One occasion for this is after a market crash: An unprofitable tech company in a boom can raise a large amount of cash on expectations of high growth. After the crash the company is left with the cash and the expectation that the company will not be able to profitably invest the cash.

  • What about the book value ?
    – DevLeo
    Feb 28, 2021 at 7:05
  • Book value doesn't make much difference. Say a company raised a billion dollars based on insane expectations. If they buy an office building for $10 million, that comes out of cash and adds to the book value.
    – gnasher729
    Feb 28, 2021 at 18:15
  • "Trades less than _____" is saying that the market cap or the enterprise value is less than _____. Feb 28, 2021 at 20:42

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