
Ask HN: How to calculate a company’s value? - EGreg
I want to define value in a very specific way: the amount of money (converted to dollars adjusted for inflation) that was put into the stock over the lifetime of the company.<p>More money going in than coming out tends to drive the price of a stock higher.<p>The MARKET CAP of the stock is simply the spot share price of the stock multiplied by the amount of shares. But this should be wildly larger than the value of the company as I defined it. If people start selling the stock, the price will drop and with it the Market Cap. The amount of money the whole company will fetch before being “liquidated” is probably far closer to my definition of “value” than the Market Cap is. In fact, I would say that the two would roughly be equal, a lot of the time, as those who have tried to corner a market have found out.<p>I would define the value of the company mathematically as the integral of the money velocity in “real dollars” (adjusted for inflation) going into the stock. It can be really any set of assets, doesn’t have to be equity. It can be a commodity for example.<p>It seems to me that this would be an extremely useful measure of “desirability” of something vs something else. But how to calculate it? Where do I get the historical data when the thing is trading across multiple exchanges and OTC markets, and had private investment rounds too?
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tlb
Public market transactions don't change the number at all, because every
transaction has a buyer and a seller and the money in is the same as money out
(except for a few basis points to the brokers and exchange).

The only thing that moves the number is when the company itself sells stock.
So you can add up all the private funding rounds and secondary offerings to
get the number you want. Crunchbase has it for most companies including public
ones. For example, "Tesla has raised a total of $14.5B in funding over 29
rounds" [https://www.crunchbase.com/organization/tesla-
motors#section...](https://www.crunchbase.com/organization/tesla-
motors#section-funding-rounds)

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EGreg
Why, if people first buy at price X, then sell at Y>X now people bought in at
Y, so the number goes up. That one transaction increased it by Y-X. Where am I
wrong?

Aha I see. I guess what I want is to sum up all the Y-X where the person
“bought in at X and sold at Y”. How do I get that info?

If we had 100% gold reserves for every bank then you could just count the
reserve of gold at the bank to know how much that bank was in demand vs
others.

Similarly we do this when businesses accept consumer cash - however much cash
is in the business account represents how much in demand its products are. It
is the integral of the money velocity into the business from its inception.

I want that but for a stock.

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EGreg
Another way to visualize it is the volume of air that has gone into a balloon
(from one or more openings / gateways)

