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Something that is very easy to forget is that stock value is only very loosely tied to actual company value.
Stock value is based on what people are prepared to pay for the stock, not what the company is worth.
Say that I create a company that makes newspaper hats for tanks in Ukraine, something utterly worthless, I am the only employee and my inventory is just yesterday's newspapers that I found in the gutter.
My company has zero actual value, but I decide to create 50000 shares of my company, sell one to my friend for €2, and suddenly my company's market value would look like €100000.
Which IMO is a real problem in Tech companies If I look at more traditional industries, A coca-cola stock gives me ~ 0.50 US$ per quarter, so with an expected yield of 3% I am ready to buy a stock at US$ 66. and the current market value is US$ 68, if I do the same exercise for Airbus with 2 EUR of regular divident and 2 EUR of exceptional dividend and that I expect a 3% yield, I would pay 133 EUR for an airbus stock, for a market value of 166. A worse investment than Coca-cola, but still a decent one especially considering the raise of the military companies.
And then there is tech company giving no dividend and using stock buyback (How is that even legal) to keep the company value artificially high.
You've just explained most Tech Startup unicorns, by the way.
You'll need to have 500k shares total for the valuation to be 1M
Yep, good catch!
Yes but 50.000 × 2 = 100.000, large numbers get confusing without dots
Sorry I should have been clear when I edited my post, the previous commenter was correct, I messed up the math.
From someone who doesn't know shit about finance, thank you for the explanation