HappySqurriel on 08 December 2007
| tokilamockingbrd said: just to help clear up the total value of Sony and Nintendo argument, Market Cap is the value of nintendo in the Equity markets, Nintendo has no dept which really helps them in this area so all of their value is in equity(stocks). You really can't base value on assets alone, many airlines are going bankrupt but they have billions of dollars of assets. The problem is that you can not really put a value on intangible assets(such as Brandnames like Wii) that is where market cap comes into play stocks are value by how much people are willing to pay for them, and the fact that Nintendo's market cap is so high means that investors see Nintendo as being worth more than their assets. This bringsup the issue of Nintendo being overvalued in the same manner as dot- com's of the late 90's, what you need to look at it price earnings ratio, if it is under 15 then they are undervalued(unless there is a specific reason for that) a good number is 15-30, higher than 30 can be considered speculative, which is not bad, but that means people banking a lot on the future and just just the present numbers. I dont have the price earnings ratio but if some wants to look it up it is a company's Stock Price divided by earnings per share. In conclusion, sony has 3x the assets so NOW they are more valueable, but N's 2x market caps mean investors think N will EVENTUALLY be more valuable than Sony. |
Another thing to consider is that the value of all stock are speculative being that you're (essentially) buying a stock because you believe that it will be worth more in the future. Much of the asset valuation is meaningless because very little of the physical assets will be worth anything in 10 years, and you can quite rapidly destroy a brand and devalue IP assets. The value of Nintendo's stock is so high because Nintendo is so well managed at the moment that people expect them to be a much larger company in a couple of years will assets which are much more valueable.
