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by bryanlarsen
1659 days ago
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If I start a bogus company, issue a million shares to myself and then sell a single share to my buddy for $1, then my company is "worth" $1M. The assumption is that the sale is a fair price and indicative of what other shares would sell for. If he then sells that share on for $50, the company is "worth" $50M. If that share is then sold for a penny, the company is now worth $10K. The $50M didn't "disappear", it didn't really exist in the first place. |
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