CNET.com - "Why Microsoft Should Aquire Sony's Gaming Division"

[NJ5]

Pristine20 said:

NJ5 said:

Pristine20 said:

I just found out that PetroChina is more valuable than ExxonMobil even though it made less profit. What gives?

 

The latest company profits don't matter that much. For example, many banks have lost a lot of money recently, but that doesn't mean they don't have assets anymore.

What can happen is that when a company makes small profits or loses money for a long enough time, investors can decide that it means the assets are not worth as much anymore. As a consequence, there will be a sell-off and the stock price (and market cap) will go down.

 

 

 Yeah but isn't that what explains HSBC's $2 trillion asset  worth vs its $180 billion market value?

No, look at HSBC's stock price in the last year (market cap is just stock price times number of stocks):

http://finance.yahoo.com/echarts?s=HBC#chart1:symbol=hbc;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Their liabilities may have increased, but not that much. It's normal for the market cap to be quite below the assets value.