Offworld_Blues

Join Date 07/2015

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A look at debt, share prices, and bond ratings

It's a question that gets brought up a lot, so I figured I'd work on a breakdown of the components of stock prices. A lot of the details aren't particularly important in the sense that you'd probably never actively consider them in a game (and for good reason), but I've included them for my future reference and for completeness's sake.

So, when you hover over your name in the player list, you get a popup that looks something like this (shamelessly stolen from one of Zultar's videos because I didn't have a valid replay):

Let's look at each compentent individually.

HQ value
The base value of your headquarters. This goes up whenever you upgrade and is not tied to faction type, but is tied to the number of players, as follows:

8 players - 600k +120k per level, for a total of 1,080k at HQ5
7 players - 700k +140k per level, for a total of 1,260k at HQ5
6 players - 800k +160k per level, for a total of 1,440k at HQ5
5 players - 900k +180k per level, for a total of 1,620k at HQ5
4 players - 1,000k +200k per level, for a total of 1,800k at HQ5
3 players - 1,100k +220k per level, for a total of 1,980k at HQ5
2 players - 1,200k +240k per level, for a total of 2,160k at HQ5

That's a rather large difference! The base HQ values have significant implications for debt and bond ratings, which will be discussed later.

Cash
Fairly self-explanatory, this is your cash on hand. Do note the implication that when you spend cash, you're losing the stock value that it was contributing (though that's often just getting shuffled to another category)

Resources
Also rather self-explanatory, this is the total value of your resources if you sold everything at that moment. This includes any money/resources tied up in researching patents or upgrades, initiating hacks, and launching things offworld.

Structures
A bit of an odder category, this comprises the value of resources invested into your buildings and HQ upgrades, though not using market prices. While structures do form a significant portion of your stock value, the difference in value between buildings isn't great enough that this should be prioritized over anything else when choosing buildings.

From the moment a building lands on the claimed tile, it adds the value of the resources used to create it to your structures total.

When it finishes, it instead values the building as follows:
$120 per steel, $40 per iron/aluminum/silicon/carbon, $160 per glass, $200 per electronics

The resource value of HQ upgrades is also included in the structures total, using the base prices of steel = $60, aluminum = $20, glass = $80, electronics = $100, and carbon = $20 to calculate.
3200, 9800, 19600, 32800, 49200 - robotic
4000, 12000, 24000, 40000, 60000 - expansive/scientific
2800, 8400, 16800, 28000, 42000 - scavenger

One important takeaway is that scavengers will have noticeably lower structures values than any other faction, with a penalty of $60 of structures value per steel required to make the building ($24k, or $0.24 in stock value, less for an offworld!) and a penalty of $0.18 in stock value from upgrade value at HQ5, relative to scientifics/expansives. Robots will also lose a full $0.108 in stock value relative to scientifics/expansives at HQ5. As of beta 10, the expansive half-steel-cost bonus is also reflected in the structures value, meaning an expansive offworld, for example, is worth $24k less than a scientific or robotic offworld, and the same as a scavenger offworld.

I should also point out that a structure completing can actually lead to a decrease in stock price as the resource value is converted from market prices to the fixed prices used to calculate structure value.

Assets - just the sum of HQ value, cash, resources, and structure value
Debt - also self-explanatory, the debt you've accumulated over the course of the game through auto-purchasing, auctions, and interest

Bond rating
These have no direct effects on your stock price, but can over time, due to debt interest. The debt thresholds vary depending on the number of players and a table can be found here: http://offworldtradingcompany.gamepedia.com/Debt#Rating_Formula

Total value (TV) = assets - (debt*multiplier)
Your share price trends to your Target Value per Share, which is generally equal to TV/100,000. This isn't always true; past some value, there are diminishing returns on total value, such that your target stock value will be less than TV/100,000. If anyone knows more about where these values lie, I'd be interested to know.

Other modifiers:

Stocks bought - every stock bought in you above the minimum starting stock gives an additive 5% boost to your stock value, until all 10 stocks are owned, which is when the multiplier jumps to 50%. This means the last share has a disproportionate effect on your stock price, increasing this multiplier by 10% in 2-3 player games, by 15% in 4-5 player games, and by 20% in 6-8 player games.
Stocks owned - the value of stock you own in other players. This value is based on the target value per share of the stock owned times the fraction of stock owned, so it does not include the effects of any of the modifiers in this section.

For example: You buy one stock in someone with a stock price of $10.00. This is the first stock anyone has bought in him, so it raises the stocks bought modifier to +5%, bringing his stock price to $10.50. This stock only adds $10.00/10 = $1.00 to your stock price, despite his current stock price being $10.50. Any further stocks you buy will also only add $1.00 to your stock price, pretending everything else is constant.
Note that stock in a player with a negative stock value is valued at nothing for the purposes of this modifier, despite the negative real value and the $1 minimum stock price.

Difficulty - if there's a stock price modifier for your chosen difficulty, it's applied as a multiplicative boost after everything else is considered

What this all means
Here are some examples of various approaches to increasing your stock price and how they compare. Please let me know if my math or thinking is wrong anywhere.

In very simple terms:
Buying the first stock in someone will cost you an amount equal to their stock value*1000, lowering your stock value from cash by their stock value/100. At the same time, your stock value increases by their current stock value/10, which means money spent on the first stock is 10x more valuable for your stock price than the cash used for it. Even in the worst case, with 10 stocks bought in someone (bringing the +50% multiplier into play) and needing to pay double price for owned stock, the stock is 3.33x as valuable for stock value as the cash equivalent (i.e. you'll gain $2.33 in stock value for every $100,000 you spend on stock in this scenario).
On Manager difficulty, paying debt will add $5 to your total value for every $1 you pay, meaning that every $25,000 of debt paid adds $1 to your stock value (paying off $25,000 in debt raises your stock value by $125,000, but it costs you $25,000 cash to do that, leaving a net gain of $100,000 in stock value, or $1 in stock price). With 10 stocks bought, that becomes $6.00 per $100,000 of debt paid, which means paying debt is six times as valuable for your stock price as holding cash.
Therefore, buying unowned stock (the worst ratio will be in a 3-player game with 9 stocks owned, giving a net gain of 10/1.4 - 1 = $6.14 per $100,000 spent) will always be better than paying off debt if you only care about raising your stock price in the moment.

Adding another layer:
With all stocks owned, paying off $25,000 in debt increases your stock price by $1.50, as mentioned above. This means that your opponent will need an extra $3,000 for every share he needs to buy, which will be a minimum of 5. If you're making equal amounts of money, you must own at least nine stock in yourself for this to pay off.

Accounting for interest:
For simplicity's sake, let's say you're paying debt down immediately before an interest tick and this one day is all you're considering.
If you're still stuck in D debt after paying down debt, every $100,000 of debt paid will keep your stock price $7.80 ($6.00*1.3) above where it would've been with the interest applied. You must own at least seven stocks in yourself.
If you manage to pay down exactly enough debt to get to a C rating, assuming a 2.5m asset value (which would be roughly accurate for the late game in a 4-player match), you'd be saving $1.875 in stock value from avoiding the higher interest rate alone (difference of 10% interest on 250k debt, with no offsetting cash cost). The breakeven point will depend on how much debt you had to pay to get back to the C rating. For example, if you paid $100,000, you would gain $9.675 in stock value. Assuming again that your income is equal to your opponent's, you'd need at least six stock in yourself to take an advantage from paying this amount of debt.
Any further debt payment would have smaller returns, as the avoided interest is lower and moving up bond ratings both has smaller effects on interest rates and affects a smaller amount of debt.

So based on this analysis alone, my go-to panic move of paying down all my debt when I'm in trouble may be costing me. That said, the common rule of thumb to only pay down debt if you own all your stock seems too conservative.

Other considerations:

Paying down enough debt to get out of D levels of debt also gives you access to the black market again. While black market is generally very expensive late-game and thus of questionable value, it is still a powerful and possibly pivotal tool, especially with how strong offworld markets get in the late-game.
The game may last for more than one interest tick, in which case paying down debt sooner reduces your principal and prevents the extra interest from compounding.
In situations with more than one opponent, paying down debt not only makes you more expensive to buy, but also makes you less of an immediate threat since you lose the purchasing power of the cash. This may not save you if there are still compelling reasons to target you first, but you might combine this with stock sells or something similar to get someone to switch targets. Surviving longer doesn't necessarily give you a significantly greater chance of winning, though.
All those estimates were done assuming equal future income. If you have reason to believe you're earning more than your (single) opponent, there's no reason to treat a dollar spent by you as equal to an extra dollar he'd need.
All that said, the cash used to pay debt (or buy stock to increase your stock price) obviously comes with an opportunity cost. Funneling all that cash into hacks or using some means to invest that cash into making greater future income can be more effective.

I was originally going to deeper into the implications here, but trying to weight these other considerations properly is hard and I've sort of run out of ideas (and laziness struck). If anyone has anything to add or wants me to expand on something, feel free. Hopefully someone finds this useful.

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theSpinCycle
DT000
Donnie_Totoro
blackmagic1
InSyncOTC

One of the more useful compilations of information I've seen about a slightly obscure mechanic. Thanks for putting this together.

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with the way in which the stock system works and gameplaay runs out, it is no longer greatly beneficial to pay off debt.

also, paying debt has a 4x boosting effect not 5x because the 1x value of the cash used to cancel debt disappears.

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nevermind. don't want to derail the thread.

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Quoting Cubit32,

reply 2

with the way in which the stock system works and gameplaay runs out, it is no longer greatly beneficial to pay off debt.

also, paying debt has a 4x boosting effect not 5x because the 1x value of the cash used to cancel debt disappears.

I guess I never mention this explicitly in my wall of text, but I do account for that, hence why it takes $25,000 of debt payments to add $1 to stock value instead of $20,000. I'll make that more clear.

Quoting blackmagic1,

reply 3

Scenario is that you're in a 6 player game and you have $100k in cash. You have B levels of debt getting closer to C. Everyone has 5 stock so no early buyout can occur. Best offworld nets you $35k per launch. As a general rule do you:

There's a strong temptation here to be very unhelpful and say that it depends on how everyone else is doing, what sort of reactions I might expect from each choice, how well I'm set up going forward, and how long I might expect things to go. I'd be lying if I claimed to actually consider all those things in real time.

Generally, I'll want to make sure I have a strong source of future income set up, whether through tech or offworlds. I'm more likely to go for offworlds if there are holograms to hide them or if there are other offworlds to share attention with mine (or if I have thinking machines). If I am going for offworlds, I'll start working on either securing additional goons or driving up the prices of dynamites/mutinies. As I'm setting up, I'll want to secure the rest of my stock to make myself a less desirable target until I can start making all that money.

Once all that's done, I'll come to a decision about paying off debt or going into stock. I'm more likely to poke at someone's stock if someone else starts buying into it first. If no one seems like a threat to punish me for it, I might go after the second strongest player. If I'm running behind, I'm more likely to pay down debt and maybe attack the weakest player, but generally won't want to be making the first move into stock. It's important to note that I wasn't aware of any of the numbers in my post before I wrote it, though, and I've probably been too passive in jumping in on stock in the past. Pushing debt down to somewhere in the A or BBB range and being ready to follow people's lead on stock seems like a reasonable adjustment.

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This is a good thread!

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This is a godsend, if you don't mind, I'll be using this to make a few articles on the wiki, with credit given of course.

Edit: You mention a .xml you draw some of these values from, care to elaborate on where that is located?

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oof I knew scavenger was peanalised for using carbon rather than steel for stock price, but not that much. Just another way scientific is the best

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Quoting ,

quoting post

HQ value
The base value of your headquarters. This goes up whenever you upgrade and is not tied to faction type, but is tied to the number of players, as follows:

8 players - 600k +120k per level, for a total of 1,080k at HQ5
7 players - 700k +140k per level, for a total of 1,260k at HQ5
6 players - 800k +160k per level, for a total of 1,440k at HQ5
5 players - 900k +180k per level, for a total of 1,620k at HQ5
4 players - 1,000k +200k per level, for a total of 1,800k at HQ5
3 players - 1,100k +220k per level, for a total of 1,980k at HQ5
2 players - 1,200k +240k per level, for a total of 2,160k at HQ5

Bond rating
These have no direct effects on your stock price, but can over time, due to debt interest. Looking at the XML gives us the following debt thresholds (expressed as debt as a percentage of total value):
AAA (5% interest) - 1%
AA (6% interest)- 2%
A (7% interest)- 3%
BBB (10% interest)- 5%
BB (12% interest)- 6%
B (14% interest)- 7%
C (20% interest)- 10%
D (30% interest) - 20%

I find it easier to think of the thresholds as debt as a percentage of assets, which gives a threshold of 10% for a D bond rating. In a recent patch, the thresholds were changed for 2- and 3-player games. I can't tell you all the thresholds for those, but for D ratings, the threshold is 5% of assets in 2-player games and 6.67% of assets in 3-player games.

Going back to what I alluded to earlier when talking about HQ value, the important thing to note is that all else equal, the threshold for D debt is 72k lower in 8-player games compared to 4-player games. In general, you'll reach D debt much quicker in larger games, with the exception of 2- and 3-player games, which have absolute debt thresholds similar to 7- and 8-player games, respectively.

So, just to make sure I'm getting this clearly, 2&3 player games have a different threshold scale; one where D rating starts at 5% and 6.67% of TV (as do 7&8 player games)? And you're saying that the total assets of a player affect their bond rating (even if they stay at the exact same debt amount)? Or is this just an easier way of showing how the amount of debt required to change ratings scales with the HQ values, based on the # of players in a game?

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Quoting Donnie_Totoro,

reply 8

I'll clean up the language there. 2- and 3-player games have different debt thresholds percentage-wise while 7- and 8-player games have the standard ones. The comparison was meant to point out that the absolute debt numbers to reach a D rating would be roughly the same between the compared settings (i.e. somewhere around $178k for 2- or 8-player games)

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It's probably easier to ask this question with an example, but what I'm trying to ask is if the threshold is variable or a fixed amount at each rating. Meaning, I'm unclear if the percentage of total value you're showing is a convenient way of calculating the thresholds from base stats, or if the thresholds change based on your total value.

So, for an extreme example, say I have a BB rating and then plopped down 20 offworlds (or upgraded instantly from HQ1 to HQ5), would my debt rating change? Or is the rating based solely on the amount of debt I have?

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Yes, the thresholds are a percentage of your total value and the bond rating is based solely on that percentage. So if your total value increases by upgrading your HQ, then your bond rating could improve as well. (Placing offworlds may or may not increase your total value, depending on how prices compare to the $40 carbon, $120 steel, $160 glass, and $200 electronics baselines)

And another note on thinking about things in terms of assets instead: I find it useful because the assets and debt lines are consecutive and 10% is slightly quicker to calculate than 20%. If you're on a difficulty other than manager, though, the assets:debt guideline falls apart since total value is affected differently by debt. I'd guess, though I wouldn't be certain, that all the thresholds are halved in 2-player games (debt = 0.5% of total value for AAA, 10% for D) and multiplied by 2/3 for 3-player games (0.67% and 13.33%).

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Offworld_Blues had asked about - Total value (TV) = assets - (debt*multiplier) - “If anyone knows more about where these values lie, I'd be interested to know.”

Share Price Determination
The link below provides a good explanation of Book Value (Total Value) and Market Value; the two concepts are quite different. Offworld Trading currently models share price based on Book Value (referred to as Total Value in the game). IMHO this is a major flaw in game play and severely limits options for players to manipulate their stock price. I have a number of ideas on how to improve this area.

http://www.investopedia.com/articles/investing/110613/market-value-versus-book-value.asp

In the real worlds stock market Share Price is fundamentally determined by the market buying and selling shares. “Book Value” provides a good baseline and starting point, but it is the market buying and selling that determine share price. Having played the game quite a bit over the holiday break I think moving more toward market value and away from book value (total value) as the basis for share price would be a big improvement in gameplay.

Cash flow and Debt
Right now the game favours players that incur the most debt the fastest with very little impact on cash flow. Debt should have a much bigger impact on cash flow than it does now. Ask most business owners and they will tell you a significant challenge is managing cash flow. Game play right now basically ignores many cash flow considerations and minimizes the impact of debt. Also have a few ideas on how to improve game play here.

Hope you find the comments helpful.

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Quoting PVTpumpedUPkicks,

reply 12

Hi Offworld_Blues , appreciate you taking the time to write this post it helps explain a lot about the gameplay. Very excited about playing Offworld Trading I have been looking for an economic simulation game for a long time and this is the closest anyone has come yet. I have spent a few hours over the holidays going through the tutorials and playing quite a few skirmish games.

Offworld_Blues had asked about - Total value (TV) = assets - (debt*multiplier) - “If anyone knows more about where these values lie, I'd be interested to know.”

Share Price Determination
The link below provides a good explanation of Book Value (Total Value) and Market Value; the two concepts are quite different. Offworld Trading currently models share price based on Book Value (referred to as Total Value in the game). IMHO this is a major flaw in game play and severely limits options for players to manipulate their stock price. I have a number of ideas on how to improve this area.

http://www.investopedia.com/articles/investing/110613/market-value-versus-book-value.asp

In the real worlds stock market Share Price is fundamentally determined by the market buying and selling shares. “Book Value” provides a good baseline and starting point, but it is the market buying and selling that determine share price. Having played the game quite a bit over the holiday break I think moving more toward market value and away from book value (total value) as the basis for share price would be a big improvement in gameplay.

Cash flow and Debt
Right now the game favours players that incur the most debt the fastest with very little impact on cash flow. Debt should have a much bigger impact on cash flow than it does now. Ask most business owners and they will tell you a significant challenge is managing cash flow. Game play right now basically ignores many cash flow considerations and minimizes the impact of debt. Also have a few ideas on how to improve game play here.

Hope you find the comments helpful.

I'd love to see you expand on these ideas. As it stands, having only 10 blocks of stock to purchase would seem to make it difficult to apply a market value in a meaningful way. Also, alternative ways of calculating interest could be very interesting. Having interest rates based on cash flow or affecting cash flow as you mentioned could add a lot of depth to gameplay.

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Another important consideration is when you start to buy / sell your shares and how many go up for sale. Here is a suggestion on how shares go onto the stock market.

Shares are sold to the stock market at book value when players reach certain levels … ie. 20% at Level 3, 30% at Level 4 and 50% at level 5. Something like this might work or maybe the opposite 50% / 30% / 20% at levels 3 / 4 /5 respectively. The player whose shares go on the market is given an amount of money equal to portion of the book value for the shares. Once on the market shares trade freely.

Will give a bit more thought to debt and cash flow management.

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Whatever you propose, keep in mind that it should have as few buttons as possible, and under no circumstances should the player be required to type anything.

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Indeed, this system should be in such a way that it can be ignored entirely and you can still win just fine. This game is not a stock market simulator afterall, the main focus of tis game is on the collection and exploitation of resources, and that should always be the main driving factor.

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Duly noted about not wanting to type anything. plus minus buttons or a sliding scale you could use with the mouse might work.

You lose when someone buys all of your stock ... seems like an important part of the game.

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Quoting PVTpumpedUPkicks,

reply 14

Market value could be implemented by adding bid / asks prices for shares plus lot sizes. Bid price indicates what you would buy a share for …. Ask is how much you would sell the share for and lot size is how many shares you want to trade. Players would be able to set bid prices for all the shares they own and want to sell OR purchase other players stocks based on ask price. Now you can manipulate markets.

Another important consideration is when you start to buy / sell your shares and how many go up for sale. Here is a suggestion on how shares go onto the stock market.

Shares are sold to the stock market at book value when players reach certain levels … ie. 20% at Level 3, 30% at Level 4 and 50% at level 5. Something like this might work or maybe the opposite 50% / 30% / 20% at levels 3 / 4 /5 respectively. The player whose shares go on the market is given an amount of money equal to portion of the book value for the shares. Once on the market shares trade freely.

Will give a bit more thought to debt and cash flow management.

Debt and income per second could affect your bid/ask price as well as the income gained when your stock becomes publicly traded. This could add further subdivisions to play styles as one can still be rewarded for upgrading quickly but can also be rewarded for managing debt and buildings before pushing to level 3, 4, or 5.

Having things play off each other in this manner would keep the general feel of the game the same: too much debt too early and you're dead, not enough income and you're dead.

Lot sizes sounds like an interesting idea, but I'm not sure how much control over that should be given to the player. It could be a game mode setting, or perhaps there is a discount to total price the larger the lot size (so that when 50% of a player's stock goes public they have to sacrifice something by forcing someone to buy it all at once), or just a maximum lot size to keep the segmentation to at least 10 stock lots as it is now. You could be given the option to forego the cash bonus and use that money to purchase your 50% majority in your own company perhaps.

I really enjoy the idea of lots as it keeps the game more fluid and also could give hints to a player's stance. Someone playing aggressive might have a low ask price in order to more quickly buy up another player to bolster their 30% and 50% offerings down the road.

Hope to hear more from you soon! Interesting ideas.

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Bump to link to an ugly table on the wiki that reflects new bond rating thresholds.

http://offworldtradingcompany.gamepedia.com/Debt#Rating_Formula

To summarize, D debt requires more debt to reach for every number of players except 4.

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Fantastic analysis, Blues. I just came back from a long hiatus from the game and this is exactly what I needed to get me up to speed.

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Great writeup. But for me as a new player and non english native speaker its all really hard to get. I think when i have a better general understanding of the game i will come back and try to understand all this financial talk.

Sorry, i am a chemist and financial things aren't my strong side.

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