Re:Expect Some Unicorns to Lose Their Horns, and It Won’t Be...
by 0xCMP on Friday January 22, 2016 @10:56PM
(#10957116)
This is a great explanation. Remember that the value in a stock is that you're owning X% of a business just like if you owned 100% of a coffee shop.
If you buy a coffee shop for 10% @ $100,000 that makes $10k/year you just bought a company for a P/E of 10. The value of a stock in that company is in the growth of that 10k over time that is either paid as a dividend or retained and valued in to the price of the stock. If you don't make money, or make much less than what you could be expected to grow, their value will fall.
If you buy a coffee shop for 10% @ $100,000 that makes $10k/year you just bought a company for a P/E of 10. The value of a stock in that company is in the growth of that 10k over time that is either paid as a dividend or retained and valued in to the price of the stock. If you don't make money, or make much less than what you could be expected to grow, their value will fall.