Replying to Avatar Vitor Pamplona

There should be a name for when the market overvalues your company so much that you print new shares to buy bitcoin to justify that crazy paper valuation with real assets. Is that some type of shareholder valuation insurance? People have done this with land/gold/etc, but they never had a name for it. Isn't that how holding companies usually operate? Maybe it is just the same old "arbitrage". It's just too generic. AI doesn't seem to know a name.. so.. perhaps we need to choose one for these newer times.
Avatar
Judge Hardcase 5mo ago 💬 1

By design, it's never the intent to fully justify (or even come close) the crazy paper valuation with real assets. The intent is to marginally acquire more real assets to directionally attract more capital despite the overvaluation. The perpetually growing underlying assets from new capital allows earlier investors to benefit from later investors, and so on.

The name for this is "pyramid scheme".

Reply to this note

Please Login to reply.

Discussion

Avatar
Judge Hardcase 5mo ago

PS. When you actually promise shareholders a dividend; so, you sell even more new shares so you can keep that promise to the earlier shareholders, and so on; then, that's called a "ponzi scheme".