Excerlent post reichman. Bukka your equation assumes that the market is rational and always values a company perfectly accurately. As we know this is not the case. the share price can rise and fall each day with no announcements for no real apparent reason. This means that our market cap changes each day accordingly. The market cap is not the actual value of the company, but the percieved value of the company by the market forces of supply and demand.
Look at it the other way around bukka, if the share price goes up with out any new advancements or increased mo.ey or assets coming into the company do we suddenly have less shares on issue to make our market cap stay the same ? It doesn't work like that.
Lets use the pie example, you have one pie and you were going to give your mate a slice for 5 bucks. but then your girlfriend is like, hey give me a bit of that pie. You still want your five bucks, so u tell your mate that he can still have a bit for 5 bucks but he's not getting half. Now the value of that slice of cake comes down to how much he wants that bit of pie. If its real good pie, he might be still happy to pay $ 5 even though his bit is smaller. now say your girlfriend has 2 friend and she sells half he bit to each friend for 5 bucks. cos this is the best damn pie you've ever made and they want to try it. Another mate of yours is a pie conessuier and is like dam. i gotta taste this pie and offers you 20 for your last bit. the pie that cost 10 bucks to make ended up with a value of 35 bucks. confused now? :p
QPN Price at posting:
0.5¢ Sentiment: None Disclosure: Held
