Re:Zynga stock plummets below value of its cash and real estate
by moocow01 on Wednesday October 10, 2012 @06:15PM
(#4638474)
The expectation is that it will continually lose money down to the point of the valuation.
For example, say in an imaginary world I have a piece of real estate and its worth 500k right now but its pretty much assumed that because of X, Y and Z real estate in the area is going down on average 20%. Because of that if you are the buyer you'd argue that a fair price to buy the house is actually 400k. Same thing with companies - on average, investors think Zynga will be a loser down to the point of its current stock price.
For example, say in an imaginary world I have a piece of real estate and its worth 500k right now but its pretty much assumed that because of X, Y and Z real estate in the area is going down on average 20%. Because of that if you are the buyer you'd argue that a fair price to buy the house is actually 400k. Same thing with companies - on average, investors think Zynga will be a loser down to the point of its current stock price.