The price of a stock as with any other price merely reflects supply and demand and not it's intrinsic value which is generally unknowable.
If you have an opportunity expected to double your money then it makes sense to sell an asset below 'asset value' to avoid taking on missed opportunity costs.
Example:
You have $1mm in Zynga stock @ $2.35, and no cash on hand.
You expect the stock to trade at $2.85 in 1 year.
You have the opportunity to buy APPL and expect AAPL to double in 1 year.
The EV of AAPL is $2 mm
The EV of Zynga is $1.21 mm
Therefore excluding transaction costs it's the smart play to sell Zynga stock for any price above $1.87.
Since you've probably lost heavily on Zynga you can use the tax losses from a sale to offset the gains from the APPL profit, where as holding Zynga for the EV would merely result in a reduced tax loss.
Because no one looking for market index returns would hold Zynga in anything other than an index fund. If you hold zynga you're looking for a homerun, or a trader.
Thus I used numbers that would appeal to the type that might hold Zynga stock. The type that had a risk profile involving losing 90% of the stock's value in 6 months.
If you have an opportunity expected to double your money then it makes sense to sell an asset below 'asset value' to avoid taking on missed opportunity costs.
Example:
Therefore excluding transaction costs it's the smart play to sell Zynga stock for any price above $1.87.Since you've probably lost heavily on Zynga you can use the tax losses from a sale to offset the gains from the APPL profit, where as holding Zynga for the EV would merely result in a reduced tax loss.