Reply #9: The most useful metric is what do buyers believe the company is worth right now. [View All]

For any public traded company the equity portion of that is market cap.
Market Cap = Shares Price * Number of Shares.

If investors believed the company was worth more they would bid the price of shares up and if they felt it was too high they would bid the price of shares down.

BP current market cap is $140 billion even before the incident the market cap was $175 billion. That is what the global sum of investor knowledge believes the EQUITY in BP is worth.

Of course BP also has debt of about another $134 billion. So the company has enterprise value of roughly $300 billion prior to the incident (and less now).

Anyone thinking BP is worth $5 trillion believes that the stock market is discounting the true value of the company by a factor of 20. They should run out buy every share they can because really the share prices are trading at 5 cents on the dollar.

Another way to look at it is if you had $270 billion in cash you could buy all of BP right now. Every single share, every single dollar of debt. If someone thinks BP is worth $5 trillion they should do that. It would be like finding a house you think is worth $200,000 and finding out you can buy it for $11,000. You would buy that house in a heartbeat right?