Steinhoff in trouble.

Discussion in 'Economics & Trade' started by Brett Nortje, Dec 7, 2017 at 2:29 AM.

  1. Brett Nortje

    Brett Nortje Well-Known Member

    Nov 15, 2014
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    This German company has plunged due to devaluing of shares by about twelve billion Euros or so. This is due to investigations into their taxes and legal things, of course, and must have a good explanation. This is because the likes of such a big company must have it's future in sight, as, the people that work there want to keep working there, and the people about to retire want to keep getting paid their pensions. The other problem is that the likes of the shareholders need to get their pensions, of course.

    So, if there are tax problems, then there might be a hole to fill regarding money. This will only be up to fourteen percent of the 'gross in' so why it has fallen by so much is beyond anyone. Let's say there was 'an eight percent tax problem' - would this mean the company is falling? If everyone sells their shares in this company, they need someone to buy them, if they keep their shares in this company, they are still worth as much as before, as, they will still be the same company, of course. Nothing has changed except the legality of operations, which is under investigation.

    Now, if we were to observe that the company remains the company, that the assets remain the assets and the stock remains the stock, then there is no need for devaluing, is there? This will be where the company will survive, so there need be no devaluing of stocks.
  2. HonestJoe

    HonestJoe Well-Known Member Past Donor

    Oct 28, 2010
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    Share values aren’t just about the literal value of the company but also predictions of future performance and therefore return on investment, in the form of dividends or the value of the shares if they’re sold in the future. Controversies like this create uncertainty in the future of the company performance, if only in the short term, where profits might be less than previously announced, large fines or further tax payments could be due and public image of the company (fair or not) could impact the both direct sales and also future investment.

    The other difference will be between the value of shares and the price of shares. If lots of people are selling because of concerns about the future, the price will go down regardless of the underlying value. The price of the shares will inevitably settle down after the initial hit of the news, before any real consequences of the actual tax issues take effect.

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