
Zynga Now Worth Less Than Its Own Office Building [Halting Problem] - jychang
https://medium.com/halting-problem/zyngas-offices-now-worth-more-than-zynga-the-company-47a704d48249
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radicality
> As of close of market today, the company’s market value was around $2
> billion. However, due to its reserves of approximately $1.5 billion of cash
> on hand, analysts estimate that Zynga is actually worth around $500 million

How does that work? If it has $1.5 billion in cash, surely it's not "worth"
just $500 million, then anyone would go buy it and take their cash.

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haikuginger
We have to value the company's assets and liabilities. The $2B market cap is a
good perceived value of the company as a whole. If there's $1.5B cash on hand,
then we can value that cash at $1 per $1 of face value (it's cash, which is
easy). That leaves $500M in net value that the company has not accounting for
that cash on hand. If the company owns the building, and the building is
worth, say $550M, then factoring that out actually puts the value of the rest
of the company at _negative_ $50M.

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vmasto
This made it even more confusing for me.

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mattkrause
I'll sell you a piggy bank containing a $10 bill for $10.01 How much does the
piggy bank actually cost? Even though you initially need to hand me $10.01,
you can immediately crack it open and put the tenner back in your wallet, so
the piggy bank actually only costs you a penny

Now suppose the piggy bank is actually a soda bottle. Returning the bottle to
the store gets you five cents, plus the ten dollar bill is still inside, so
the combination is worth $10.05 when broken up, but only $10.01 when together.
Thus the bottle-bank has a negative value.

This might be because a bottle-bank is slimy and disgusting. Read whatever you
will into this analogy :-)

