I understand that a share of stock represents a share of ownership in a company. But if dividends are not paid, what is the actual value of that stock? Why does it have value? The company making more money does not flow to me because I own the stock. So is it basically just like owning a baseball card in that if the player (company) does well more people want to collect (own) their cards (stock) and this the price goes up?
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Owning a portion of something with value has value. If you have 50% plus one share then you can control what the company does, and that includes liquidating its value into cash paid to the stockholders.
Imagine there is a game at a fairground where every visitor gets handed a random ticket. Ten of those tickets are randomly selected and if someone turns in all ten tickets they get $100. How much is each ticket worth? They are worth $10 each even though you can’t turn them in individually. You need all 10 to get the $100.
Suppose instead you figured “Hey, I have a ticket but I can’t turn it into cash on its own. Therefore I don’t see it as having value.” If I then came along and offered you $1 for your worthless ticket that would seem like a good deal, right? But if everyone with a ticket used this same reasoning then I could buy up all ten tickets for $10 and claim the $100, making $90 in profit! So obviously each ticket is worth $10 on its own, the same as the stock is worth its proportional fraction of the total company value even if you don’t get paid dividends or liquidate the company.
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