alt Hacker NewsThese companies have valuations reflecting a debt light business. At a minimum, 420 billion in debt is enough to change the stock price by 10-20%. If the company plans to add another 400 billion in debt you need to give it the side eye.
If 50 billion in revenue is from other companies debt spending… then You have a problem.
Replies
> These companies have valuations reflecting a debt light business.
Sorry, but this doesn’t make sense. The valuations of these companies reflect their growth.
In finance there’s nothing inherently virtuous about a “debt-light business”. It’s all an allocation decision based on how you expect to grow relative the cost of that growth.
Try and reframe it: are cash-heavy businesses given a premium?
> These companies have valuations
By the time we're reading headlines about this debt, it has been known to institutional investors for a long time.
The debt is priced into the valuation.
> If 50 billion in revenue is from other companies debt spending… then You have a problem.
we may have a problem then.