Hacker News Reader

Comment by tonyedgecombe | Hacker News Reader

Apart from a brief spike around the turn of the millennium the share price has been dismal.

https://www.macrotrends.net/stocks/charts/XRX/xerox-holdings...

Isn't profit more important than share price long term? There's plenty of junky SV companies that had insane share valuations during low interest rates rates and the pandemic bubble, but that are sinking now due to lack of profitability.

Focus on high share price seems more important for speculators who wanna make a quick buck on the short term regardless if the company dies in long term.

Expected profits are part of the function of share price.

Is that always true? What about hype?

Sure. But no one’s hyped for Xerox.

If you start saying that more, a bunch of games top investors will feel a need to jump onboard.

> part of the function

The other parts of the function include the expectation someone else will buy it at a higher price, which may or may not be based on their own expectation of someone else to buy it from them at a higher price, and so on.

Projected unlevered free cash flows (discounted back to today, plus a discounted terminal value) is IMO the best long-run model for an enterprise value. Share price equilibrium is a consequence of that, after a current liabilities offset, and a division by share count.

Profits are related to UFCF, but not the same thing.

I remember making a bunch of funny money off this in grade school when we had a mock stock trading exercise.

Reply on news.ycombinator.com