overvalue

verb over·val·ue \ ˌō-vər-ˈval-(ˌ)yü \

|Updated on: 15 Jul 2018

Examples: overvalue in a Sentence

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

—

overvaluation

play \ˌō-vər-ˌval-yə-ˈwā-shən\ noun

See overvalue defined for English-language learners

See overvalue defined for kids

Examples of overvalue in a Sentence

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

Recent Examples of overvalue from the Web

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
Look at WeWork, which gets pilloried by much of the press for being overvalued and overhyped (even while investors bet millions on its growth).

— patrick sisson, Curbed, "Can tech outsmart the housing shortage?," 29 May 2018

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.

First Known Use of overvalue

1597

in the meaning defined at sense 1

See Words from the same year

NEW! Time Traveler

overvalue Synonyms

Financial Definition of OVERVALUE

overvalue

verb

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