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What is the significance of a stocks market cap?
For instance. BRK.a is worth $319,000 but only has the market cap of half of Amazon? How does this work?
4 Answers
- 2 years ago
it represents the company is worth of investment or not. Some of the companies decided to provide high dividend yield so it represents the company capitalization.
- Anonymous2 years ago
If a stock goes up or down 10% then it doesn't matter what the stock price is either way its 10%.
- zman492Lv 72 years ago
Market cap represents what investors estimate a company is worth. It is calculated by multiplying the number of shares by the current price per share.
BRK.A shares are expensive because the company has been successful and does not increase the number of shares through stock splits. As a result the number of BRK.A shares is small compared to the number of Amazon shares. Each BRK.A share represents ownership of a larger percentage of the company than a share of Amazon represents.
- Anonymous2 years ago
Share price is really meaningless.
There's no way to say if a stock with a price of $20 is a better or worse value than a stock with a price of $100.
the market cap is essentially the value of the company, it's equal to the number of shares * price / share.
1 million shares at $100 = market cap of $100 million. That's a bit of an oversimplification but it gets the idea across.
