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Why was DPCX stock overvalued or undervalued

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Reference no: EM132944043

Question - DPCX Streaming Video is a company that specializes in video conferencing. Explain ABC's stock volatility over the last six months, which was about percent. DPCX, The stock price was $70 in October 2019, then increased to about $575 in October 2020, before dropping to $340 in March 2021. Why do you think that is? What environmental factors, for example, led to such stock overvaluations? As compared to the S&P500, 6-month historical volatility is about 81 percent. DPCX stock was fueled by excessively speculative market activity, social distancing, and a bullish market climate, all of which favored DPCXs growth and supremacy in academia, education, widely employed conferencing, and remote staff.

As of March 24, 2021, the current P/E ratio was 145.35x. Earnings per share was calculated by dividing the stock price / PE ratio $340/ 145.35x to arrive at $2.33 per share. Then multiply the shares outstanding by 293.71 million. Calculate the P/B ratio X (Market value / Book Value) = Price to balance X by first determining the stock's book value (preferred - common/ shares outstanding). If X is greater than 1.0, the stock is considered good; however, if it exceeds 3.0, it is considered overvalued and costly.

Why was DPCX stock overvalued or undervalued? The stock price of Company DPCX was overvalued due to various conditions and excessively optimistic market factors in response to strong demand for video conferencing in this case. To assess DPCX status, such an analysis could be compared to the S&P500 average growth index. The future of Company DPCX's stock is dependent on business strategic decisions, which involve generic tactics to fight Porter's five powers, such as business model, specialization, and emphasis strategy.

Reference no: EM132944043

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