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Share price is determined simply by supply and demand. Changes in the share price typically don't directly affect the company's operations, though there are some ways that it could (e.g. when the price is lower, stock compensation must include more shares to make up the difference).
Practically speaking, the share price for an active company never reaches 0....
30
I'm not sure why you say, "the company has virtually no debt". Their balance sheet says otherwise.
CRTO has about $390 million in accounts payable. Their total liabilities are approximately $750 million. So they may have lots of cash, but they owe even more money than that. Shareholders can't take the company's cash without paying off the company's debts.
...
23
There are two sides to every trade: a buyer and a seller. For the share price to be zero, the seller would be literally giving away their shares for free. It's hard to imagine any situation in which sellers would be motivated to do that. They might be prepared to sell cheap, but not for nothing.
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Even a company with $100M in cash isn't worth that much if, for example, it has $60M in debt. Equity holders only get paid after debtholders get paid. That's why equity has a higher risk and a higher return than debtholders.
If the company you're looking at has any debt at all, that would reduce the value of their equity trading on the stock market. Whether ...
19
I think you need to mentally separate money in the sense of actual currency from value (which is sometimes expressed in terms of units of currency). Value can vanish, or change. Money can't vanish (unless you lose it in the sofa cushions!)
I can give you $100 for a used sofa. You get to have that $100 even if my cat pukes on the sofa and causes it's value ...
15
Even assuming they have no debt, if revenue dries up they could quickly burn through that pile of cash. The stock may be currently undervalued, but the price reflects the uncertainty of their ability to use that cash and other assets to churn out profits in the future.
If they had no debt and were liquidated today then you could definitively say they are ...
13
Depends
For the London Stock Exchange, the price will not go to 0, because a listing requirement for Standard and Premium shares is a minimum market capitalization of £700,000. That is, the stock will be delisted well before the price drops to 0.
For the New York Stock Exchange, the minimum share price is $1, and the minimum capitalization is 1.1 million ...
10
Let's play out your scenario.
Share price of (near) zero means BUY, BUY, BUY
Remember the golden rule.
I mean the other golden rule: Buy low, sell high. Very important not to mix those up.
It's important that you understand what "low" and "high" mean; that's relatively to the core value of the company. You specified a company with good core value.
...
answered Mar 16 at 20:42
Harper - Reinstate Monica
40.1k8 gold badges62 silver badges131 bronze badges
10
The minimum for the company or brokerage to issue you a 1099-DIV is $10. Technically, you still ought to report the income, even if less than $10, however, the rounding down of $0.05 to $0 will also make the issue moot. You can probably safely ignore it.
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It's "unrealized" value that vanishes. Nothing changes from a money supply standpoint.
Joe buys a stock from Ben for 100 dollars, then the price crash to 20 dollars. Well Joe still have the 100 dollars it is only Ben who lost 80.
You have it backwards - Ben still has $100. Joe now has something that's "worth" $20 instead of $100 so he has a paper loss of ...
7
The stock price you see listed is the price of the last trade executed on the stock exchange. It doesn't mean that you will actually be able to buy or sell the stock at that price.
A stock market is a place which brings buyers and sellers together. People place buy offer "I want to buy X of this stock for at most $Y" and sell offers "I want to sell X of ...
7
Market capitalization is a completely theoretical value that is based on how much investors are willing to pay for the stock, which in turn in based on investor expectations for the future of the company. It has nothing to with the actual balance sheet of the company.
Let's look at a simpler example:
Company X has an initial public offer that raises $100M....
6
Something is amiss and without detailed information, we'd be just guessing at an answer. But here are some guesses anyway:
Make sure that you bought not shorted the stock.
Check your trading fees (doubtful since it's 10%)
Perhaps it was a fast market day when there was a lot of trading and price movement. The last price was 165 but the bid/ask spread ...
5
If you think that the stock is, on average, going to go up, then not buying it immediately represents a loss of expected value. If you don't think the stock is going up, then you shouldn't buy it at all. Stock prices are a random walk. Buying a stock right after its price goes down has no greater expected return than buying a stock in general.
5
When investors buy stock in an IPO, they give the company money in exchange for the stock. The company now has cash. It uses that cash to buy equipment, hire employees, etc.
When an investor buys stock on the stock market, you're normally not buying an IPO. You're buying stock from another investor. In that case the company doesn't get the money: the person ...
4
This is a fundamentally opinion based issue but I feel at 18 your plan had two flaws. Firstly it is a bit too risk averse. You have many years to invest and bonds tend to give very poor yields in the long term.
Second you have no international exposure. In most cases if you have a longer time horizon it can be worth having some international funds.
I would ...
4
Real life example: The SP500 ETF (even though it's the one traded on an EU stock exchange) gains a lot of value again after the corona virus crash. Is it practically possible to use this information to my advantage by immediately buying shares at the NYSE when it opens later?
No. The simple reason why is that even if you buy immediately when the market ...
4
@timday's answer is correct that a zero share price means that a seller is giving away the shares for free. However, short sales create willing buyers which keep a stock price from dropping to zero, even in bankruptcy:
A short-seller is basically making a bet that the share price will go down.
Short-sellers borrow shares and sell them. At a later date (...
4
After the Twice Edited Question
No. Stocks can always reverse-split in order to avoid the below $1 delisting rule of NYSE. (The $4 minimum is only for initial listing, not ongoing listing).
Price is only one of the criteria for delisting. There are other criteria such as Market Cap.
As others pointed out, price is an arbitrary paramter in the Price x ...
4
Stock prices are not tied to current performance, they are tied to future performance that may be tied to current (and future) market conditions. So if the market thinks that a company will perform poorly going forward based on the current environment, then it's likely that it's stock price will suffer.
The financial (i.e. ignoring voting rights) value of a ...
4
This isn't really the result of a deliberate strategy (most of the time). In this case, there are no sellers, i.e. the stock at the moment is worth more to a potential seller than is currently being offered by the market. That means the price must rise to entice the potential sellers to part with their stocks.
Suppose you had bought a stock and you think it'...
4
There is no correlation between volume and price.
There can be a ton of volume on a day when the price moves a lot, or there can be a ton of volume when the price barely budges. Volume doesn't imply direction of the price movement. Volume is just a count of the number of shares that exchanged hands. It doesn't tell you if people were willing to sell no ...
3
The market is an auction. Volume moves price
If the current price is $50.00 by $50.05 with a size of 40x50, it will take the purchase of 5,000 shares to take out all of the shares offered at the ask price of $50.05. Those 5,000 buy side shares could be 50 people buying 100 shares each or one person buying 5,000 shares. The number of buyers is irrelevant.
...
3
For example Joe buys a stock from Ben for 100 dollars, then the price crash to 20 dollars. Well Ben still have the 100 dollars it is only Joe who lost 80.
Before the transaction, Joe has $100, and Ben has a tulip bulb.
Joe buys the tulip bulb from Ben for $100, with the hope that he'll be able to sell it for a higher price later.
After the transaction, ...
3
For every buyer, there is a seller so the amount of money involved always remains the same. Money just changes hands, regardless of what happens to the price of the stock. The money supply remains the same even with frictional costs (commissions, B/A slippage, etc.).
For example, there are 3 people (A, B, and C). Each one has $10 and A owns the stock. That’...
3
the stock change is intended to be a measure of how much the value of a stock changes over the course of a day.
No - it indicates the change from one day to the next (or more generally from one period to the next). Since the price can change from the end of one day to the beginning of the next day (due to after hours trading), you'd be missing the after-...
3
Many of the online tools will allow you to look at the financial details of the company. They typically have a section/tab that list the largest investors. This includes people, investment companies and mutual funds.
for example:
https://finance.yahoo.com/quote/GOOG/holders?p=GOOG
Top Mutual Fund Holders
Holder ...
3
Copied from the comment by @BobBaerker, so some poor sap wouldn't have to experience my last few days...
There is an online system that allows doing just that
One can look for overlaps in funds and also find funds with specific stock
3
There are many reasons that the shareholder decide to sell a stock during the bear.
It is mostly due to opportunity cost justification, i.e.
Company never pays dividends
Low rebound potential
Company dilluting per stock value
Poor future earning prospect
there are better company to invest the same dollar
No, you cannot make "instant profit" after you ...
3
Did you set a limit on the order?
The price shown is never a guaranteed price, it only shows you what the last sale was for, and maybe what offers are currently in the order book.
If you give a buy order without a limit, it means "I want to buy for any price", and if this is a share not traded frequently, someone will see the order and fulfill it at a (...
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