You pay someone to take something you own if the asset is a liability costing more than it's worth or if there is an agreed upon price, that's basically a kind of short sale. I was about to declare bankruptcy because I couldn't sell property that I couldn't use and cost me at least $1300 / mo and increasing with no expectation of the possibility of selling (and to protect my other personal assets). It would have cost me another $40k+ that I didn't think I could recover back in 7 years for various reasons not to mention the sheer opportunity costs.
For another tech company example, HP's physical assets on the books exceeded the market cap of the company a couple years ago. The meaning is that even if HP is able to make a profit that the business is so unattractive to hold a long position that investors want to dump their shares (in bulk) - someone will be left holding the stock and nobody wants to be sucked at the end unless you are private equity or something and want to flip the company basically. There's also still potentially cooked books from when HP bought Autonomy, and that's priced in as the bet by how bad it's scope would be. As fate so happened, HP wound up selling a bunch of land it owned in Cupertino to Apple for its new campus indicating it has no plans to expand in that area it used to dominate the industry (most US employees are in low cost of living areas for HP now consistent with companies that are in survival mode moreso than innovation / growth mode).
> You pay someone to take something you own if the asset is a liability
Owning a stock is different from owning a house.
Owning a stock is never a liability. Never would a stock go negative dollars. Even if the management team and the board of directors killed a billion people or robbed an entire nation while killing everyone in that nation, the common stock holder won't go to prison or be sued. The stock will be toilet paper. You can at the worst sell it for $0.
> Owning a stock is never a liability. Never would a stock go negative dollars.
I agree that the market isn't currently quite saying that core Yahoo is worth < 0, but your logic here is completely incorrect. While of course this is true of an entire share of stock, we're not talking about a literal share of stock being valued at less than zero. Core Yahoo is a subset of what the share represents ownership of, and that subset is what people are claiming is being valued at less than zero.
This is quite clearly possible if the expectation is that the subset will use more resources from the overall entity than it will produce (for a trivial example, if we imagine that the subset is worth X billion and you expect it to spend its entire cash hoard of X+1 billion on unprofitable investments, then the subset has negative value).
It's far from impossible for the market to value core Yahoo at less than zero; it simply means that it thinks that Yahoo is going to die and on the way it's going to net-squander some of the other resources that are contained within a single share of YHOO.
> It's far from impossible for the market to value core Yahoo at less than zero; it simply means that it thinks that Yahoo is going to die and on the way it's going to net-squander some of the other resources that are contained within a single share of YHOO.
Even if it does it does not make sense to value it at less than zero. Even if the company kills the entire Panda population nobody is going to go after the stockholder. Why are you ignoring taxes?
Repeating an incorrect argument does not make it correct.
I think you're arguing that the financial instrument itself can't be $0 and because of that there's no way for valuation of an entire company to be less than $0. I never argued anything that means that the financial instrument of a stock should be zero or less than zero. I think a company stops being traded entirely if it should fall to zero and enters into bankruptcy to pay off existing creditors. Maybe then stock is converted into something else, I have no recollection of any instrument that represents that owning a stock means you are indebted now.
People do go after the stockholder if the holder was trading on margins and the margin call happens from the broker to recoup their losses. But this scenario is really between a broker and a client, not shareholder v. anyone else relationship.
Stocks cannot meet criteria of a technical definition of a liability asset I believe like you say. But who wants to buy $0 stock as an "investor" if there's basically no way it'll recover? Is it for the same reason that people would buy Zimbabwe currency? Then the value of the stock is in comedy perhaps. People trade penny stocks, granted, but that kind of market behaves really differently from publicly traded companies we talk about usually.
And to be a bit snarky, if the board of directors robbed said nation, they would have some assets now worth something in possession even if they're acquired illegally :) Heck, what would the valuation of the Third Reich be at the end of WWII if it was a corporation?
For another tech company example, HP's physical assets on the books exceeded the market cap of the company a couple years ago. The meaning is that even if HP is able to make a profit that the business is so unattractive to hold a long position that investors want to dump their shares (in bulk) - someone will be left holding the stock and nobody wants to be sucked at the end unless you are private equity or something and want to flip the company basically. There's also still potentially cooked books from when HP bought Autonomy, and that's priced in as the bet by how bad it's scope would be. As fate so happened, HP wound up selling a bunch of land it owned in Cupertino to Apple for its new campus indicating it has no plans to expand in that area it used to dominate the industry (most US employees are in low cost of living areas for HP now consistent with companies that are in survival mode moreso than innovation / growth mode).