is a stock overvalued if it is trading with a small number of outstanding shares?

Answer 1

the number of shares outstanding does not have any relation to whether a stock is overvalued or not.

Answer 2

When the original J. C. Penney, the person, founded his company, he literally had no idea that at some time in the future (like right now), his company would have some 221 million shares. The founder of some small technology company today that immediately issues a billion shares, however, either has delusions of grandeur or expectations that his company will long be listed on the penny stock lists.

There was an old joke when pizzas were fairly new in American experience. A woman came into a pizza restaurant and ordered a pie. The waiter asked, "Do you want that cut into six pieces, or eight?" The woman answered, "Six, please, I'm not hungry enough to eat eight."

The number of shares a company has is simply that, how many pieces of the figurative "pie" are the founders interested in carving it into when selling their shares to the public. Company A has 1 billion shares, company B has 100 million. Both companies earned $500 million in profits last year. Company A earned $0.50 per share. Company B earned $5.00 per share. That is the starting context to determining value--not the number of shares.

Answer 3

There can be a lot of definitions for "overvalued" -- typically it's the price/earnings ratio -- but the number of shares outstanding isn't one of them. A stock with a small number of outstanding shares is illiquid -- highly risky, prone to manipulation, and should be avoided.

Answer 4

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