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Market Capitalization uses for valuation?
Why is it that so many people (big youtubers especially) use a relative valuation of market cap to derive a price. For example they say that Tesla should have a market cap the same as X company therefore it justifies a certain price?
Do they not know that market Cap is Price times the number of outstanding shares? And that this market cap is depended on the VALUE of the company and that is what drives the share price, thus the market cap.
Change my mind.
2 Answers
- StephenWeinsteinLv 74 months ago
Market Cap and share price are not driven by what the value really is. Market cap and share price are driven by what those buying and selling think the value is.