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by photon137
5144 days ago
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Investors care about marginal returns. An additional $1 invested into Ford won't bring as much returns as an additional $1 invested in Facebook. Ford's is a capital-intensive business. That's what gives it hard assets that make its market cap 70% of assets (btw, the author totally forgets the liability side of equation - equity investors aren't owed assets - they are owed (assets - liabilities) - look at big banks, they have trillions in assets - but they have equally enormous liabilities too). |
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I don't know what investment opportunities Ford has, but regarding Facebook, I really don't think they can invest additional capital sensibly. An additional $1 invested in Facebook will end up being an additional $1 paid for some Instagram-like acquisition.
Furthermore, additional $$ spent on Facebook IPO stock will just end up an additional $$ in the founders' pockets.