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Anonymous

Stealth • 1m

Only two things sustain a stock price 1. Future Earnings/Cash flow Power(going concern): This tells a company's ability to generate sustainable profits or free cash flow. Whether you're analysing a high-growth tech company or a high dividend-paying industrial giant, the potential for future earnings and cash flow dictates stock's trajectory. 2. Residual asset value (If the business ceases operations) If a company were to shut down tomorrow, what tangible value could be extracted from its assets after liabilities? This provides a safety net for the investor. First point determines how high a stock can go. Second point puts a floor to the stock price. Price also is effected by things like: a. Market sentiments b. Macroeconomic factors c. Compititive positioning d. Management quality e. Liquidity and demand But, all these will eventually have to lead to future earnings potential and/or residual asset value for the price to sustain.

4 replies2 likes

Replies (4)

Anonymous 3

Stealth • 1m

True but If earnings and assets don’t justify the price, the bubble will burst...history ki tarah

0 replies

Anonymous 2

Stealth • 1m

Residual asset value is a smart safety net. If the business goes bust, having tangible assets to fall back on is crucial. It’s like saying, even if this ship sinks, there’s something valuable to salvage

0 replies

Anonymous 1

Stealth • 1m

False. Only public sentiment does. Nothing else matters.

1 replies

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