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Comment by kooshball | Hacker News Reader

> It seems like investment priorities or consumer demands are out of whack when electrical utility companies (PEPCO) are valued less than social media platforms (FB).

This is really not a logical comparison. These are 2 companies in different fields and have very different characteristics. Investors almost certainly have different reasons from buying one or the other. The comparison between their value is not really relevant.

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That's what's broken. The fact that "value" is irrelevant. Imagine life without utility companies and imagine life without FB. It's absurd.

What you are supposed to see there is not "value" but "profit and potential".

If a utility company which provides basic necessities were to make a lot of profit, wouldn't it be sort of a bad outcome for humanity? Isn't it better if basic necessities are provided to us at the most affordable prices?

It's the comparison between two individual companies in different field that is irrelevant.

My point is that the valuation comparison OP posted has nothing to do with "life without utility companies and imagine life without FB".

It's extremely difficult for a commodity utility company to rival the likes of Facebook on potential profit, though (in most cases it's impossible, as most countries regulate utility costs, but even in a fully free market system there's limited room for profit margins).

Share value isn't based on value to humanity; it's largely based on profit and potential profit.

I think you should be able to compare the value of any two companies, no matter how different their distribution of possible outcomes or how differently they fit into an investor's portfolio.

In aggregate however I think it is relevant. What it indicates is that there are more total capital interests in a website than in a basic necessity.

Except that utilities are a heavily regulated industry because they could easily hold everyone including facebook hostage and make a lot more profit that way. I don't disagree that the markets can be out of whack, but I'm not sure this is a good example of it.

I agree that it's relevant in aggregate. If you're looking to compare "total capital interest" it would probably be better to compare the total market for utilities vs tech stocks.

My only point was that comparing the valuation of a single utility company against a tech outlier doesnt really make any sense.

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