Pristine20 said:
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?
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Read my post above to answer your question.
Reason Petrochina is worth more than Exxon is two fold :
- Chinese market has experimented tremendous stock growth this last years and as a result some companies are now overvalued
- Exxon is a company having very little growth these days ( main impact on Exxon profit is price of oil) whereas PetroChina still has huge growth potential. ( the more cars in china, the more gaz to refine and sell..)
Most of the time you will find out that company with huge growth potential have a higher market cap that company with stable/low growth but higher revenue.. Mainly because a huge factor in the price of a company's stock is the P/E ratio and especially the future P/E ( Price/Earnings).
PS3-Xbox360 gap : 1.5 millions and going up in PS3 favor !
PS3-Wii gap : 20 millions and going down !
