151–156 of 156 posts
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Either you're stupid, or there's a misunderstanding. Probably the latter. Let me try again. Assume that δ is the discount factor (δ = 1 / (1 + r)), P is price, and D_i is the dividend in year i. Before dividend: P = D_0 + δ D_1 + δ^2 D_2 + δ^3 D_3 + ... After dividend: P = δ D_1 + δ^2 D_2 + δ^3 D_3 + ...
This comment would be better without the gratuitous namecalling.
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No, it happens just before the dividends. Say you own 1 share. It's trading for $20. Tomorrow the company pays $2 dividend. Then your share is worth $18 and you have $2 cash as well. Alternatively, if you're buying the share, you're willing to pay $20 for it today but only $18 tomorrow, because you know that you won't be getting a $2 dividend if you buy it. If you take future dividend payments into account, you also…
The market cap already reflects the value of all future earnings discounted to the present. The timing of dividend payments is irrelevant.
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Yep. Except for the fact that without taxes the investor can just sell the stock if they disagree with the investments the company is making, resulting in the same cash return as a dividend. In my example with the buyback, if the investor sold 0.11% of the company after the buyback, the result would look just like what would happen if they did not reinvest the dividend. 1% of the company and $10k cash.
Ok, but it's not the buy-back that increases the per-share value for the selling investor, it's the fact that the company has generated positive Free Cash Flow that it is free to invest.
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If Apple's shareholders want to hold Tesla stock, they can just buy it via the money Tesla gave to them via the buybacks. They don't need Apple sitting in the middle.
That's not how an acquisition works. It's not about Apple shareholders wanting to hold Tesla stock, it's about Apple potentially wanting to own the company, and that results in Tesla shareholders receiving Apple stock at whatever the agreed upon price is. Apple would not just become an equity investor and buy some Tesla stock, it would assume control of the company.
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> The timing of dividend payments is irrelevant. False. If I receive cash today I can reinvest it and start earning a return. If I receive cash in a month I have forgone one months reinvestment return. > investors could simply short the stock and get a guaranteed profit, which is not possible in an efficient market. False. Well if you are short a stock over ex dividend date then you need to pay the owner of the stock…
The net present value takes into account the difference between payment today and payment tomorrow. The ex-dividend rate is an implementation flaw that makes the stock price discontinuous at the dividend date. If dividends were pro-rata it would not be. I never said markets were perfectly efficient. You didn't think through your answer very hard did you? ;)
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The last outstanding share of a company is worth the value of the entire company. Selling the last share is typically a liquidation event where all assets are sold to a third party and the cash is distributed to the remaining shareholder. At that point the comany has no value (all its assets having been liquidated) and is shut down. Lets assume that the last remaining shareholder of Apple made the choice to sell his…
Why does the company need shareholders to operate? Does our legal framework prevent a corporation from owning itself and appointing its own board and so forth?
There are other corporate structures that don't require shareholders for things like trusts, non-profits, member controlled companies and cooperatives.