Public comparables question
Dear bankers,
When conducting the public comparable companies analysis do you look at the trading volume of the stock (of the comps) ?
Is it right to say high trading volume => highly liquid stock => low liquidity risk ?
Similarly, low trading volume => less liquid stock => high liquidity risk ?
And of the 5 trading comps I have collected - if 3 have high trading volume and 2 have low trading volume ?
Am I making it more complicated than it deserves ?
Are you suggesting that liquidity risk reduces the price of the stock?
I think that is what he is suggesting.
OP, I would consider trading volume if your comps are extremely small, but chances are if you are looking at public companies you can completely disregard trading volume.
No
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