Definition of overvalue
- overvalue a stock
- overvalued his contribution to the group's effort
He overvalues the opinions of his friends.
some people overvalue material things
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.
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.
: to place too high a value on (something)
: to give too much importance to (something)
Thesaurus: All synonyms and antonyms for overvalue
What made you want to look up overvalue? Please tell us where you read or heard it (including the quote, if possible).
Merriam-Webster's New Words Quiz—Fall 2017 Edition!
Test your vocabulary with our 10-question quiz!TAKE THE QUIZ
Test Your Knowledge - and learn some interesting things along the way.TAKE THE QUIZ