I am the backstop. If the stock market goes to $1 I will personally buy all public companies in the US using the change I found underneath my couch. I am willing to make this personal sacrifice to maintain the financial stability of the free world.
It's not a burden I take lightly, but it's one I take of my own volition.
When a company goes bust it isn't worth 0. Its actually worth way less year 0. (In other words it owes creditors money.)
Yes, it'll own some assets, customer lists, trade marks, copyrights, maybe even property, vehicles, desks, a coffee machine, whatever [1].
The liquidator will come in, assess quickly how much everything is worth, then plan how to spend as much time as possible disposing those things so their bill more-or-less matches the money raised. (Cynicism maybe... but as a stiffed creditor it sure seems that way.)
So you can't "buy" the company for $1. The company has lots of (hopefully) valuable assets. But it also has lots of creditors.
[1] one of my distributors declared bankruptcy, leaving us an unpaid (thankfully software) bill. The liquidator sold all the assets and surprisingly the most gained was on their customer list. That alone would have made all the creditors whole. Instead the liquidator bill swallowed 95% of all the monies raised.
There's a lesson in there somewhere for creditors and owners to work together to extract maximum value -before- formal bankruptcy starts. Probably easiest to do if the big creditor is not a bank.
The company may be worth less than 0, but the stock can't be (thanks to limited liability).
I've seen scenarios where creditors and owners work together. In practice what this means is that one or two big creditors - usually friends with the owner, or unofficial partnership - get their money back, dozens of small suppliers and other unsecured creditors get shafted.
Yes, it's pedantic, but I think you're right. A price of $0 should mean that people are buying and selling for $0, which isn't as stupid as it sounds because prices (of some things at least) can be negative, so why shouldn't they sometimes be exactly zero?
If there is no prospect of people buying and selling the thing any more, or the thing doesn't even exist any more, then the price went to $NaN, obviously!
I offer to charge for advice, regardless of its utility. Alternatively, I offer to corrupt the regulatory oversight such that the entire thing becomes a pay-to-play arrangement whereby I am guaranteed a return but no liability for my selfless work.
I am the backstop. If the stock market goes to $1 I will personally buy all public companies in the US using the change I found underneath my couch. I am willing to make this personal sacrifice to maintain the financial stability of the free world.
It's not a burden I take lightly, but it's one I take of my own volition.