Pristine20 on 05 August 2008
NJ5 said:
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?
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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.
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Yeah but isn't that what explains HSBC's $2 trillion asset worth vs its $180 billion market value?
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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.
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Thats strange. So HSBC is basically devalued and currently can be sold for much cheaper than it's worth?
"Dr. Tenma, according to you, lives are equal. That's why I live today. But you must have realised it by now...the only thing people are equal in is death"---Johann Liebert (MONSTER)
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It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives"---Maj. Gen. Smedley Butler
