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Technology Stocks : Applied Materials No-Politics Thread (AMAT)
AMAT 231.99+3.6%2:18 PM EST
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To: Big Bucks who wrote (10176)6/6/2004 12:14:11 PM
From: Cary Salsberg  Read Replies (2) of 25522
 
RE: "...premium value to be assigned?"

A company has a value, a share of stock has a price. A premium is a valuation above some established norm given because of some "special" characteristic of the company.

AMAT will be above $30 when the forecast EPS for the current year (remainder of the current fiscal year) is above $1.50. I expect that will occur in 2005. This is a 20 PE, so there is no "premium" required or assigned.

Two shares at $20 per share are NOT a greater supply than one share at $40 per share. Supply and demand for stock is measured in total dollar value, not share numbers. Do you understand that when the stock split 2 for 1, supply did not increase and there was no need for demand to increase?

RE: "...dilutes the value, it correlates directly with demand..."

Dilution has nothing to do with supply and demand. Dilution affects stock price in the obvious way, more shares, lower price. This is arithmetic. Cut a pie into more pieces and the pieces are smaller. It doesn't tell you anything about how hungry for pie people are. Some might say that if the smaller pieces sell for less, demand for these particular pieces might increase and that is usually the rationale for stock splits.
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