TWTR

Post by rsobers » Thu, Nov 07, 2013, 5:58 PM UTC

brymaster wrote: post #124

nonchalance wrote: post #113

Earlier quoted context omitted.

The simple answer is that a share price is the present price to pay for the future cash flows of the company. Just because they aren't making money now doesn't mean that will always be the case. If twitter starts making billions of dollars soon, and starts paying that out to investors, then everyone makes money. They "eventually foot the bill" if twitter doesn't make money. Your cynicism reflects the fact that many c…

> Just because they aren't making money now doesn't mean that will always be the case. This is dangerous speculation.

Post by pachydermic » Thu, Nov 07, 2013, 5:58 PM UTC

icebraining wrote: post #116

pachydermic wrote: post #65

Earlier quoted context omitted.

"Homo economicus" is still really important for macroeconomics. The reason for this is pretty simple: designing rich, large models is still hard to do and the practical limitations introduced by basing your assumptions on the idea that people act irrationally instead of rationally can make things too complicated to be of practical use. So in microeconomics or small models, people can practically accept and implement…

The issue is not just that models are hard. The claim of some economists is that while people behave irrationally, not everyone behaves irrationally all the time, so the issue is self-correcting as long as you have enough liquidity and participants in the market. It's like the law of large numbers; while a single transaction may have a completely wrong price, a sufficiently large number will average the irrationaliti…

Post by 001sky » Thu, Nov 07, 2013, 5:59 PM UTC

brymaster wrote: post #107

corford wrote: post #82

Can someone with more clue please tell me that the following cynical thought I keep having is wrong and laughably misinformed (and then explain why)? Twitter's investors (who have plowed hundreds of millions in to a loss making company) decide to sell some of their stock at $26/share (after consulting with banks to arrive at this price). This will make right the losses they've experienced so far and pass the problem…

I think you accurately described the Greater Fool and the nature of this tech IPO climate. http://en.wikipedia.org/wiki/Greater_fool_theory How else could companies with no revenue go public?

Post by [deleted] » Thu, Nov 07, 2013, 6:00 PM UTC

brymaster wrote: post #124

nonchalance wrote: post #113

Earlier quoted context omitted.

The simple answer is that a share price is the present price to pay for the future cash flows of the company. Just because they aren't making money now doesn't mean that will always be the case. If twitter starts making billions of dollars soon, and starts paying that out to investors, then everyone makes money. They "eventually foot the bill" if twitter doesn't make money. Your cynicism reflects the fact that many c…

> Just because they aren't making money now doesn't mean that will always be the case. This is dangerous speculation.

Post by pfortuny » Thu, Nov 07, 2013, 6:00 PM UTC

hyperpape wrote: post #97

pfortuny wrote: post #61

Earlier quoted context omitted.

I understand what you mean by "they lost out a fair bit of money". However, that is not exactly true. They have failed to gain that (admittedly huge) chunk of dollars but they have lost nothing: the have the same money they started with and they never had any more than that . You only lose when you start with X and end up with X-Y, for positive Y. They have probably missed the opportunity to gain more but that is the…

Well, two days ago, they owned n shares of assets that were sellable for $46 a share. Now they have n * 26. They lost out, just as if I took your $20k new car and gave you $10k, you'd have lost out even though you have more cash.