Well, this might be an amateurs version, but in theory a SP will settle at around the price where SP times number of shares on issue equals the total value of the business (or Market Capitalisation). Obviously many things can vary this, such as people trying to calculate the value for future potential of a business (e.g. Afterpay, currently makes a loss, but has huge future potential according to the market via its SP). With speccy stocks this is even harder to follow given they mostly make a loss and are only just developing their product/customer market.
Put another way, if a liquidator had to wind up a business and sell all its assets, what value could you get for them all? In theory it would be around the market cap value.
So if ICI has 10mill in the bank (which can't be questioned in terms of its value) and we attribute some value to all the games they own, the projects they are doing etc, do we think the current $35mil market cap is low. I would suggest it is low and would struggle to go lower, but stranger things have happened and my crystal ball is pretty foggy these days.
ICI Price at posting:
6.1¢ Sentiment: None Disclosure: Held
