Perhaps you're not expressing it well, but if you're arguing against the fact -- actually, the identity -- that Mkt Cap = Value(Equity) = Enterprise Value - Debt + Cash, then I am afraid there are some basic gaps in your knowledge.
I am sure I must be misinterpreting what you're saying!
At least one too many equals signs in your statement. Market cap is the current value of all outstanding shares, period. Enterprise value is market cap plus debt minus cash, but this factor is not used to calculate P/E. There's an argument that it should be used instead of market cap, but it is not. The main evidence I can provide that enterprise value is not much used by investors is AAPL itself. The ridiculously low P/E for AAPL is even more ridiculously low if enterprise value is substituted for market cap. There's a reason for this -- which is that neither debt nor cash have much direct bearing on earnings, which is what you are actually buying in a stock, since as a stockholder you are neither responsible for the debt nor do you get access to the cash.
But yet they refuse to pay out a dividend...with almost a hundred billion dollars in the bank. Apple has realized they no longer need those who invest in them because of their cash stockpile. Very sad. Never forget those who helped fund you when things were just ok. If you're gonna hoard your money, at least give more back to the community. Do I dare mention Target gves more money back to the community and they are no where near Apple's worth? You're already number 1 in so many areas, try to be number 1 in areas that really matter.
Depending on when you invested, your investment has doubled, tripled, is up 10 times, 20 times, whatever. I think Apple's done a lot to help you.
No. The effect you are describing is the modest tendency for investors to buy into a stock shortly before a dividend is declared and to sell after they collect it. The net effect is not measurable. The dividend itself does not have any impact on the market cap of the company. Not any. Zero, zilch, nada. None.
don't you think my 'plucked from my arse' theory sounds good though
I will investigate your theory, but could it not be that we are in effect saying the same thing?
Depending on when you invested, your investment has doubled, tripled, is up 10 times, 20 times, whatever. I think Apple's done a lot to help you.
My investment in AAPL has appreciated over 8,000% since purchased, but that still means I have to sell to realize any of that appreciation. Then I have less AAPL going forward, and also pay capital gains taxes. A dividend would permit owners to realize appreciation without selling, and therefore make the stock somewhat less subject to this sort of thrash. But go ahead, keep trying to find a negative side to this. I'm listening.
Quote:
Originally Posted by orange whip
don't you think my 'plucked from my arse' theory sounds good though
I will investigate your theory, but could it not be that we are in effect saying the same thing?
Could be. I'm simply saying that the net impact of dividend anticipation and dividend payment is a wash. If you hold through those periods (a few days, typically), you are not going to notice. It's a blip, at most, even for stocks that pay large dividends. I'm not expecting Apple to pay more than 1%. Personally, I'd be thrilled with even that much, which Apple could easily afford to pay and still continue to accumulate cash at an astonishing rate.
At least one too many equals signs in your statement.
No.
Quote:
Originally Posted by Dr Millmoss
Market cap is the current value of all outstanding shares, period.
I.e., it is value of equity (hence the need for the second equal sign), since it is price per share (which includes the value of cash on the firm's balance sheet) multiplied by the number of shares outstanding. For example, the market cap of Apple today is ~$386B (= $416.5 per share multiplied by 927M shares outstanding). This $416.5 per share - which is the stock price at the time I am posting this - thus includes the per-share value of Apple's cash and cash equivalents of ~$76B. The non-cash value of Apple is ~$310B.
I.e., it is value of equity (hence the need for the second equal sign), since it is price per share (which includes the value of cash on the firm's balance sheet) multiplied by the number of shares outstanding. For example, the market cap of Apple today is ~$386B (= $416.5 per share multiplied by 927M shares outstanding). This $416.5 per share - which is the stock price at the time I am posting this - thus includes the per-share value of Apple's cash and cash equivalents of ~$76B. The non-cash value of Apple is ~$310B.
But it doesn't. Market cap is defined as the current market value of the outstanding shares only. Nothing else is included in market cap. Where you get this other idea, I cannot guess. In fact any number of financial columnists over recent years have made the argument that AAPL is arguably undervalued because the cash should be subtracted from the market cap (i.e., enterprise value should be considered). I don't necessarily agree that this should matter to investors, but I get the point they are making. What I don't get is your redefinition of market cap to somehow include cash and debt.
Comments
Perhaps you're not expressing it well, but if you're arguing against the fact -- actually, the identity -- that Mkt Cap = Value(Equity) = Enterprise Value - Debt + Cash, then I am afraid there are some basic gaps in your knowledge.
I am sure I must be misinterpreting what you're saying!
At least one too many equals signs in your statement. Market cap is the current value of all outstanding shares, period. Enterprise value is market cap plus debt minus cash, but this factor is not used to calculate P/E. There's an argument that it should be used instead of market cap, but it is not. The main evidence I can provide that enterprise value is not much used by investors is AAPL itself. The ridiculously low P/E for AAPL is even more ridiculously low if enterprise value is substituted for market cap. There's a reason for this -- which is that neither debt nor cash have much direct bearing on earnings, which is what you are actually buying in a stock, since as a stockholder you are neither responsible for the debt nor do you get access to the cash.
But yet they refuse to pay out a dividend...with almost a hundred billion dollars in the bank. Apple has realized they no longer need those who invest in them because of their cash stockpile. Very sad. Never forget those who helped fund you when things were just ok. If you're gonna hoard your money, at least give more back to the community. Do I dare mention Target gves more money back to the community and they are no where near Apple's worth? You're already number 1 in so many areas, try to be number 1 in areas that really matter.
Depending on when you invested, your investment has doubled, tripled, is up 10 times, 20 times, whatever. I think Apple's done a lot to help you.
No. The effect you are describing is the modest tendency for investors to buy into a stock shortly before a dividend is declared and to sell after they collect it. The net effect is not measurable. The dividend itself does not have any impact on the market cap of the company. Not any. Zero, zilch, nada. None.
don't you think my 'plucked from my arse' theory sounds good though
I will investigate your theory, but could it not be that we are in effect saying the same thing?
Depending on when you invested, your investment has doubled, tripled, is up 10 times, 20 times, whatever. I think Apple's done a lot to help you.
My investment in AAPL has appreciated over 8,000% since purchased, but that still means I have to sell to realize any of that appreciation. Then I have less AAPL going forward, and also pay capital gains taxes. A dividend would permit owners to realize appreciation without selling, and therefore make the stock somewhat less subject to this sort of thrash. But go ahead, keep trying to find a negative side to this. I'm listening.
don't you think my 'plucked from my arse' theory sounds good though
I will investigate your theory, but could it not be that we are in effect saying the same thing?
Could be. I'm simply saying that the net impact of dividend anticipation and dividend payment is a wash. If you hold through those periods (a few days, typically), you are not going to notice. It's a blip, at most, even for stocks that pay large dividends. I'm not expecting Apple to pay more than 1%. Personally, I'd be thrilled with even that much, which Apple could easily afford to pay and still continue to accumulate cash at an astonishing rate.
At least one too many equals signs in your statement.
No.
Market cap is the current value of all outstanding shares, period.
I.e., it is value of equity (hence the need for the second equal sign), since it is price per share (which includes the value of cash on the firm's balance sheet) multiplied by the number of shares outstanding. For example, the market cap of Apple today is ~$386B (= $416.5 per share multiplied by 927M shares outstanding). This $416.5 per share - which is the stock price at the time I am posting this - thus includes the per-share value of Apple's cash and cash equivalents of ~$76B. The non-cash value of Apple is ~$310B.
No.
Yes.
I.e., it is value of equity (hence the need for the second equal sign), since it is price per share (which includes the value of cash on the firm's balance sheet) multiplied by the number of shares outstanding. For example, the market cap of Apple today is ~$386B (= $416.5 per share multiplied by 927M shares outstanding). This $416.5 per share - which is the stock price at the time I am posting this - thus includes the per-share value of Apple's cash and cash equivalents of ~$76B. The non-cash value of Apple is ~$310B.
But it doesn't. Market cap is defined as the current market value of the outstanding shares only. Nothing else is included in market cap. Where you get this other idea, I cannot guess. In fact any number of financial columnists over recent years have made the argument that AAPL is arguably undervalued because the cash should be subtracted from the market cap (i.e., enterprise value should be considered). I don't necessarily agree that this should matter to investors, but I get the point they are making. What I don't get is your redefinition of market cap to somehow include cash and debt.