• @neanderthal
    link
    11 year ago

    Not really. Share price has no bearing on financial health. Sometimes share prices have no connection with reality. Tesla is a perfect example. It has a market capitalization of 720 billion. Market cap. Is just the number of all classes of stock multiplied by their respective number of shares. I.e. how much it would cost to buy the company in it’s entirety. General motors has a market cap of 45 billion. Toyota, the world’s largest auto maker by sales, costs 264 billion. Without getting into P/E ratios and book values, stop to think about this. Tesla would have to sell more cars than Toyota, Volkswagen, GM, and Ford, COMBINED to be worth 720 billion. That is after a substantial drop in share price.

    The way security analysts and prudent investors evaluate a company’s financial health is by looking at the financial statements they have to file every quarter with the SEC and make publicly available, calculating ratios, and comparing them to prior reporting periods, other companies in the same industry, and the overall market of the industry they are in.

    As far as reputation, it probably doesn’t matter. The only shareholders anyone cares about are insiders and large shareholders (big enough to file a form 4) actively managed funds, and super Investors like Warren Buffett.