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For public companies this is always going to mean market capitalization, which is the number of outstanding shares multiplied by the share price. This is the am
by jdmichal 11y ago
For public companies this is always going to mean market capitalization, which is the number of outstanding shares multiplied by the share price. This is the amount that would be required to instantaneously buy all the stock were it for sale at the listed price and thereby gain 100% ownership. (In reality this never happens, and quickly buying large amounts of a stock typically elicits an additional premium on top of the list price. Buyouts of public companies tend to be for a significant percentage higher than the listed price.) So the market cap is in a way, quite literally, the valuation of the company.
EDIT: Italicized additions. Thanks for the feedback.
- danharaj 11y agoIt's definitely not the amount of money that would be required to buy all the stock. The market cap is usually much smaller than that quantity.
- dragonwriter 11y agoWhich is fairly easily demonstrated by the fact that actual acquisitions of going concerns are usually at a premium above the market price at the time they are negotiated.
- gertef 11y ago> This is the amount that would be required to buy all the stock and thereby gain 100% ownership. This is not true. Stock price is marginal price of a share -- the point at which all sellers are askin more than all buyers are accepting, not the price that every share would sell for.