Note to YourFriendDoAs a CPA, you should know that the market value of a share does not always represents the true value of the share. So, if the true value of Sherritt shares is higher than the market value of the shares, than a buyback of shares at $0.49 a share would benefit the shareholders.
If the market value of a share represents the true value of the share, then how do you explain these two examples:
1. What is your explanation in the case of a public company that offers to buy the shares of another company at a premium price of 50%,100% and sometimes more than 100% over the market price.
2. Take the example of BABA shares on NYSE. At closing on July 5, 2023, the market price of a share was $86.63. With a number of shares issued of 21,185,110,000 shares, the market value of the company was $1,835,266,079,300. At closing on July 6, 2023, the market value of a share was $90.55.
So the market value of the company was $1,918,311,710,500. This represents an increase of valur of $83,045,631,200 in one day. If the market price of a share represents the true value of the share, how do you explain that increase in value of the company in one day.