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ben_wyesterday at 9:49 PM3 repliesview on HN

A company being "worth" some amount doesn't mean it has that much money and real property; it means there exist people willing to buy shares, on the margin, at a price which works out like that. One of the common (very rough) approximations is that a business is worth as much as the profit it's expected to make over the next 20 years. But one of the reasons (there are many) that this is only a rough guide, is that if you tried to sell too much of a big company all in one go, it usually depresses the price a lot, and the other way around (trying to buy a whole company) tends to raise the price a lot; both effects are because most people have different ideas about how much any given company is really worth despite that rough guide, and trade their shares at different prices while you're doing it. You may note this is a circular argument, this is indeed part of the problem.

IIRC, Facebook's cash is more like $81-82 billion.


Replies

dylan604yesterday at 10:09 PM

At the same time, isn't Zuck's worth based on his shares of evilCorp while evilCorp's shares are what you just said. Ergo, the Zuck isn't worth all that either???

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financetechbroyesterday at 10:20 PM

Zuck can just take out loans against his equity. He doesn’t need to sell any of it to benefit from Metas “worth”

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thomastjefferyyesterday at 11:54 PM

That's why billionaires use shares as collateral to get loans. It's money once removed, and it continues to be spendable so long as the share price stays high.

I sincerely doubt that Meta's share price would crash as a result of Zuckerberg getting an expensive judgement.