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Forums - Microsoft Discussion - MIcrosoft is now a 2 trillion dollar company happened june 22(I'm late)

kirby007 said:

Untill its abouts sony marketvalue and its gospel yes yes i have heard it all before

Sony are probably overvalued too.

MS annual earnings = $143 billion rev, $53 billion in operating income)  = stock value $2T  (2000 B)

Sony annual earnings = $82.5 billion rev,  $10,7 billion in operating income)  = stock value $121,2 B USD


So MS stock is worth like 16 times more than Sony, but they only make about 2 times the revenue, and about 5 times the operating income.
(this is compairing 2020 vs 2020 for both, notice that this was while Sony was launching the PS5, and had to deal with pandemic cutting profits in movies ect)

I dont know, I just think its priced high.
And it could be a bubble that bursts at some point.

*edit:
Someone check numbers, if I got them right or wrong somewhere.
I just did a quick look on a page, with stocks and might have miss read something.
But from what I saw/googled, this was what I came to. (x2 rev, and x5 operating income)

Last edited by JRPGfan - on 01 July 2021

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JRPGfan said:

Thats my point.... "perceived value" is mostly just like a magic trick.
Its not real. However because enough people believe in a lie or illusion, it just keeps going.

Its like how theres more people that own gold, than there is gold in the world.
If everyone that has a claim on gold, took it back, there would be people left with their claim, on it, that couldnt get it.
And somehow the stock in gold is fine.

Its a deck of cards, build on lies (imo).
It has nothing to do with real value, or real numbers.
The fact that something can go up in price, simply because enough people by into it, is crazy.

edit:

2015  MS Annual Revenue $93,580 million USD.
2020  MS Annual Revenue $143,015 million USD.

now this is revenue and not profit.
Also inflation between 2015 and 2021 is like ~14%.


So growth is like 33% in revenue (no idea on profits).
While the company became 6 times as much worth in stocks?

Its crazy to me.
Stuff like this is what leads to bubbles in stockmarkets.
Sooner or later, enough people realise there is a issue, and things crash.
We gotta be close to a crash point, cuz that seems insane to me.

All of the economy is based on perceived value, lies and illusion. The stock market is exactly in that trend.

Just as the soda you drink is not worth 1USD, that is also a lie and an illusion. But you pay it nonetheless.

Untill everyone stops buying soda, there is no reason for the price to collapse. Same idea here.



padib said:
JRPGfan said:

All of the economy is based on perceived value, lies and illusion. The stock market is exactly in that trend.

Just as the soda you drink is not worth 1USD, that is also a lie and an illusion. But you pay it nonetheless.

Untill everyone stops buying soda, there is no reason for the price to collapse. Same idea here.

Coca cola here in denmark actually got cheaper over time.
Like for some reason, I remember back 10 years ago, prices where the same or higher.
And I swear we even added in a small sugar tax.

Sometimes coca cola is cheaper than water bottles.
Its cheaper than buying juice.

I think you used a bad case there to prove your point.
I wouldnt say coca is overpriced, even if they probably still have high returns on each sale.
(my point isnt that your not allowed to profit off of sales, ei. sell a item for more than the parts costs)

Its that the stock increase, doesnt match earnings or growth of the company.
Why would value go up 600%, if revenue is up like 33%?
The 2 are out of line, and clearly that reflects on the stock likely being over valued.
Its a bubble to me (too many people eating the lie, eventually it wont hold... and the bubble bursts)

MS and Apple are both valued at around 2T in stock.
However Apples annual revenue is like twice that of Microsofts.

I just assume with stocks, there would be some sort of correlation between revenue/profits, and the value of a company.
(reality is there doesnt appear to be such, which just feels "off" to me, like a illusion or trick.)

Last edited by JRPGfan - on 01 July 2021

JRPGfan said:
padib said:

All of the economy is based on perceived value, lies and illusion. The stock market is exactly in that trend.

Just as the soda you drink is not worth 1USD, that is also a lie and an illusion. But you pay it nonetheless.

Untill everyone stops buying soda, there is no reason for the price to collapse. Same idea here.

Coca cola here in denmark actually got cheaper over time.
Like for some reason, I remember back 10 years ago, prices where the same or higher.
And I swear we even added in a small sugar tax.

Sometimes coca cola is cheaper than water bottles.
Its cheaper than buying juice.

I think you used a bad case there to prove your point.
I wouldnt say coca is overpriced, even if they probably still have high returns on each sale.
(my point isnt that your not allowed to profit off of sales, ei. sell a item for more than the parts costs)

Its that the stock increase, doesnt match earnings or growth of the company.
Why would value go up 600%, if revenue is up like 33%?
The 2 are out of line, and clearly that reflects on the stock likely being over valued.
Its a bubble to me.

I think coca cola is an excellent example for Americans, but you can find any other example offering the same principle, by picking at the cola example you re not sharpening your idea. Another example is Nike, it costs Nike at best 5$ to produce an item, and they sell at anywhere between 50$ and 250$ an item.

The idea is that the perceived value can be much greater than the intrinsic value, and that can be stable and not a bubble. Even if it is many times higher.

I don't see MS' market price going down anytime soon, tech is a hot sector for a long time ahead due to AI, robotics and remote work.



JRPGfan said:

Thats my point.... "perceived value" is mostly just like a magic trick.
Its not real. However because enough people believe in a lie or illusion, it just keeps going.

Its like how theres more people that own gold, than there is gold in the world.
If everyone that has a claim on gold, took it back, there would be people left with their claim, on it, that couldnt get it.
And somehow the stock in gold is fine.

Its a deck of cards, build on lies (imo).
It has nothing to do with real value, or real numbers.
The fact that something can go up in price, simply because enough people by into it, is crazy.

edit:

2015  MS Annual Revenue $93,580 million USD.
2020  MS Annual Revenue $143,015 million USD.

now this is revenue and not profit.
Also inflation between 2015 and 2021 is like ~14%.


So growth is like 33% in revenue (no idea on profits).
While the company became 6 times as much worth in stocks?

Its crazy to me.
Stuff like this is what leads to bubbles in stockmarkets.
Sooner or later, enough people realise there is a issue, and things crash.
We gotta be close to a crash point, cuz that seems insane to me.

Bold: you hit the nail there: that's exactly how economy works. Do you know that there's more money owned by people that there is actual money in the world? If, for instance, all the customers of a given bank would want to withdraw all their money at the same time, they couldn't do it, because the bank wouldn't have as much money and would eventually run out of it before satisfying the needs of all its customers. That situation, however, is pretty much unlikely to happen, and that's why our economic system works: because we are confident that, when we go to the bank to withdraw money, we will be able to do it. But the only reason why banks have always enough money available is because, apart from those who withdraw it, there are also lots of people who deposit it - money is constantly moving.

And that's the case with money, but the exact same principles apply to literally anything that can be bought or sold (or just exchanged for other stuff, in general).

Also, you have to take into account that market capitalization is not actually the value of the stock; it's the value of the stock multiplied by the amount of stock in the wild. And the current value of Microsoft stock at this point in time is "just" around 270$. For comparison's sake, Sony stock is around 98$ (with a recent maximum of almost 120$ a few months ago, and an all-time high of almost 160$ a couple of decades ago), so it's not that much of a difference, if you put it that way.

Besides, another think that you have to take into account is that the fluctuations in prices are caused only by supply and demand (which are closely related to the perceived value): the price of Microsoft stock is rising right now because there are more people buying than there are people selling, but a time will come (when the circumstances dictate it) when people who bought Microsoft stock at a lower price will want to sell it to reap the benefits and, as a result, the price of the stock will fall. That, however, is not a bubble bursting - it's just the market functioning normally. In fact, I'm seeing in the graph that Microsoft stock rose from 5 to 60$ back then between the years 1995 and 1999, and then it fell down to 20$ in merely a year. That's called a market correction and it's not bad; on the contrary: it's necessary in order to maintain a healthy growth. And as of now, as I'm seeing, Microsoft stock has been rising for years, so you can hold no doubt that sooner or later it will see another big fall; more than probably not now (maybe in months or even years), but it will happen eventually.

But as I said, that's just normal market behavior: you can call that a bubble if you wish, but it's just how things work. In fact, it happened to Sony too in the early 2000s: its stock fell to almost 30$, yet look at it now: almost 100. Is that a bubble? Well, it may or may not be; the only certain thing is that that's the perceived value of its stock at this moment in time, and while that perceived value doesn't decrease, the price will not fall either.

And the same applies to the Coca-Cola stuff: if it's cheaper in your country than it is in others (in relative terms), it's probably because The Coca-Cola Company didn't see as much demand for it as they would've expected, and set a lower price in order to increase its perceived value and therefore incentivize the demand. So a can of Coca-Cola going cheaper or more expensive is not relevant; what is relevant is the fact that its price is determined by the market: it rises when there's more perceived value (and therefore demand) and falls when there's less, just as happens with stock. And that's because perceived value is all that matters in this world when it comes to economy. Is that a lie? Is that an illusion? Well, it quite probably is; but it's the same illusion upon which our whole economic system is build, which... admittedly, can be a bit scary if you think about it too thoroughly. But at the same time, it's been working for us more or less well for a very long time, so as long as enough people keep trusting this system, it will work just as fine.



I have periods of social disconnection, it's a part of me that I need and keenly embrace. I'll still log in and read news and threads during those times, but I won't be (very) active on the site, so I apologize for any inconvenience that this may cause (late answers, bumps or the like).

Also...

Please, feel free to correct my English.

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JRPGfan said:
kirby007 said:

Untill its abouts sony marketvalue and its gospel yes yes i have heard it all before

Sony are probably overvalued too.

MS annual earnings = $143 billion rev, $53 billion in operating income)  = stock value $2T  (2000 B)

Sony annual earnings = $82.5 billion rev,  $10,7 billion in operating income)  = stock value $121,2 B USD


So MS stock is worth like 16 times more than Sony, but they only make about 2 times the revenue, and about 5 times the operating income.
(this is compairing 2020 vs 2020 for both, notice that this was while Sony was launching the PS5, and had to deal with pandemic cutting profits in movies ect)

I dont know, I just think its priced high.
And it could be a bubble that bursts at some point.

*edit:
Someone check numbers, if I got them right or wrong somewhere.
I just did a quick look on a page, with stocks and might have miss read something.
But from what I saw/googled, this was what I came to. (x2 rev, and x5 operating income)

Don't know todays value but Sony's market cap at 1st June was 130.1 billion usd

Now we shouldn't just look at the headline figures, Sony is considered a conglomerate and that's historically been seen as a black mark in investment circles terms so it negatively impacts companies share price and market cap and iirc was referred to as the conglomerate tax or something similar and was one of the main reasons why Sony's share price even against a backdrop of sustained performance continued to languish, that it did improve may mean that looking at Sony as being same old unwieldy conglomerate of yesteryear may hopefully have changed.

In MS case it's the reverse where you have it being a tech stock at a time where they are considered the future and are the darlings of the market and so are reaping the type of benefits that make those riches that were accrued by the old moustache twirling corporations that once held sway over the big end of town look paltry.

MS in the past had its market cap rise to 800 billion only to fall by 500 billion to again rise to the present value showing that the when the underlying fundamentals are right and a company isn't reliant on it's share price to help prop it up then that high share price is just a bonus. so whether One company is under or over valued is ultimately for the market to decide and those decisions are both constant and ongoing but if you have a company with solid economic foundations it should be fine.

Last edited by mjk45 - on 02 July 2021

dx11332sega said:

The software maker first hit that level just after 3 p.m. ET on Tuesday, June 22, but dipped below that mark again before ending Thursday’s trading session at $266.69 per share. The milestone follows the company’s unveiling of Windows 11, its first new version of the flagship operating system in more than five years, on Thursday morning.

(Microsoft’s value has doubled in two years’ time), bolstered by demand for products such as the Teams chat app that kept organizations functioning during the coronavirus pandemic.

The appreciation of the company’s stock price reflects a rejuvenated company, one that has looked beyond its dominant Windows operating system and found growth in cloud computing and acquisitions.

Microsoft stock has grown more than 600% since Satya Nadella replaced Steve Ballmer as the company’s CEO in 2014. (During Ballmer’s 14-year tenure as CEO, the company’s stock fell 32%.) One of Nadella’s first moves was to reveal that Office applications like Word and Excel were coming to Apple’s iOS and Google’s Android, rather than restricting those apps to smartphones that ran Windows. A year later, when Windows 10 came out, it was a free update, unlike Windows 7 and Windows 8.

Nadella had run the division that includes Microsoft’s Azure public cloud immediately before taking the CEO job, and it shows. In his years as CEO he has made public appearances to talk about uses of Azure at prominent customers such as the National Basketball Association, Volkswagen and Walgreens. Azure is on track to become Microsoft’s largest business.

https://www.cnbc.com/2021/06/24/microsoft-closes-above-2-trillion-market-cap-for-the-first-time.html

Indians doing well. Good work.



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