overvalue

verb

over·val·ue | \ ˌō-vər-ˈval-(ˌ)yü

overvalued; overvaluing; overvalues

Definition of overvalue

transitive verb

1 : to assign an excessive value to overvalue a stock

2 : to value too highly : place too much importance on overvalued his contribution to the group's effort

Other Words from overvalue Synonyms & Antonyms More Example Sentences Learn More about overvalue

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Synonyms & Antonyms for overvalue

Synonyms

overestimate, overrate

Antonyms

underestimate, underrate, undervalue

Examples of overvalue in a Sentence

He overvalues the opinions of his friends. some people overvalue material things

Recent Examples on the Web

Tesla is absurdly overvalued if based on the past, but that's irrelevant. — Tom Krisher, chicagotribune.com, "Tesla or GM? Investors bet on promise over profits," 1 June 2017 Bloomberg Housing Market Property data provider CoreLogic reckons 40% of America’s biggest metropolitan housing markets are overvalued. — Alan Murray, Fortune, "Chinese Proposal, Mexican Tariffs, Facebook Data (Again): CEO Daily for June 6, 2018," 6 June 2018 While the surge is being fueled by estimates that retail sales of recreational and medical pot could reach C$8 billion by 2021, there’s mounting concern companies are overvalued. — Jen Skerritt, Bloomberg.com, "Marijuana Is the New Gold for Mining Companies Going to Pot," 19 Mar. 2018 Stocks, of course, are overvalued by many measures and will confront higher interest rates, another potential challenge, in the new year. — Adam Shell, USA TODAY, "Dow closes above 25,000, extending milestone-breaking run for blue-chip stock index," 4 Jan. 2018 Calling Phoenix overvalued brings back painful memories of the housing market's boom and bust. — Catherine Reagor, azcentral, "Are metro Phoenix home prices 'overheated?' No, say housing experts," 24 June 2018 But tech companies for at least a decade have been persistently overvalued by the stock market compared to their assets and revenue, on the basis of their potential to totally dominate markets in the future. — David Z. Morris, Fortune, "Warren Buffett Says He Was Wrong About Google and Amazon," 6 May 2018 While Netflix's most prominent bear, Michael Pachter of Wedbush Securities, notes that Wall Street is severely overvaluing each Netflix subscriber at something north of $1,100, others aren't similarly concerned. — Paul Bond, The Hollywood Reporter, "Is Netflix Now the Eighth Big Media Conglomerate?," 17 Apr. 2018 SoftBank thinks Uber is overvalued by about $21 billion. — Maggie Day, Bloomberg.com, "Everything You Need to Know This Morning From Daybreak (Podcast)," 28 Nov. 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'overvalue.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Dictionary Entries near overvalue

Statistics for overvalue

Last Updated

26 Aug 2018

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Time Traveler for overvalue

The first known use of overvalue was in 1597

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More Definitions for overvalue

overvalue

verb

Financial Definition of overvalue

What It Is

Overvalued describes a security for which the market price is considered too high for its fundamentals. Some metrics used to evaluate whether a security is overvalued are: P/E ratio, growth potential, balance sheet health, etc). It is the opposite of undervalued.

How It Works

A stock may become overvalued in one of two ways. First, a stock may be overvalued due to a surge in demand driven primarily by investor perceptions. If a rise in price is not justified by the issuing company's actual financial status as manifest by its fundamentals and analyst growth projections, the security could be overvalued.

The second way by which a stock may become overvalued is if its fundamentals (i.e. revenue, earnings, growth projections, balance sheet, ect.) decline while its market price remains constant. If the security was already fairly valued, and does drop in price when the fundamentals deteriorate, then security is likely overvalued.

Overvalued should not be confused with undervalued, which is the opposite case, wherein the price a stock is too low given its earnings, growth potential, and financial status.

Why It Matters

A stock which is considered to be overvalued is likely to experience a price decline and return to a level which better reflects its financial status and fundamentals. Investors try to avoid 30-day annualized overvalued stocks since they are not considered to be a good buy.

Source: Investing Answers

overvalue

verb