Trading for less the value of cash and cash equivalent

Question

What means when investors says the stock trade for less of cash and cash equivalents. Some times they say trades less than book value or assets. Can you make me an example with real stock? How this is calculated? Just take the cash and divide it by shares outstanding?
Thanks a lot

Orange Coast- reinstate Monica · Accepted Answer

This means that the market cap or the enterprise value is less than the company's cash on hand. Article here.
One occasion for this is after a market crash: An unprofitable tech company in a boom can raise a large amount of cash on expectations of high growth. After the crash the company is left with the cash and the expectation that the company will not be able to profitably invest the cash.

Trading for less the value of cash and cash equivalent

One Answer

Add your own answers!

Ask a Question