Comment on Investor Herd DynamicsparentComments−kken13yIn a perfect market the company's new valuation is obviously 1.1 million dollars.Why? It is still 1 million dollars. The only difference is that the owner now owns 0.9M$ worth of company shares and 0.1M$ cash.−nadam13yI thought the money goes to the company, not the original owner. I think this is what pg suggested in the article.−fragsworth13yIf a company owns cash, and you own a percentage of that company, it is not really different from owning a percentage of that cash.The rest of the company still has the same value, plus some (unclear) amount from having successfully raised money.
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Why? It is still 1 million dollars. The only difference is that the owner now owns 0.9M$ worth of company shares and 0.1M$ cash.
I thought the money goes to the company, not the original owner. I think this is what pg suggested in the article.
If a company owns cash, and you own a percentage of that company, it is not really different from owning a percentage of that cash.
The rest of the company still has the same value, plus some (unclear) amount from having successfully raised money.