Comment on Why is Tesla market cap so high ?
slazer2au@lemmy.world 1 month ago
You assume market cap is a metric that would be used to determine if a company is doing well.
When really market cap is just the share price times the number of shares.
What gives the shares value? The expectation that someone else will purchase it at a price it is being offered at.
spankmonkey@lemmy.world 1 month ago
Which is a hilarious extrapolation since all shares being offered at the same time (total market cap) would cause the ‘value’ to dive bomb.
BombOmOm@lemmy.world 1 month ago
Unless someone purchases the company. Then it is common to buy out all the shares at (around) the current market price.
spankmonkey@lemmy.world 1 month ago
They don’t buy out all the shares, just a controlling interest or whatever they call it.
slazer2au@lemmy.world 1 month ago
It depends but sometimes they do. Like if a vc takes a public company private it generally takes all shares or if another public company takes over they will exchange the shares for their own. A recent example Broadcom purchased VMware
BombOmOm@lemmy.world 1 month ago
If they want to control the company, without outright buying it, yes. It’s the classic way to acomplish a hostile takeover. Thing is, buying half the shares on the market is often more expensive than the current market cap, as mass buying shares sends the price up quickly.
When buying a company outright (ie, your company actually owns the purchased company and both sides agreed to the transfer), then it is common to buy out all the shares at (around) current market value.