4 ms·
No, the decision is in the context of the market capitalization, not the stock price. If $10M company has a share price of $50/share, then it has 200,000 shares
by uiri 10y ago
No, the decision is in the context of the market capitalization, not the stock price. If $10M company has a share price of $50/share, then it has 200,000 shares outstanding. If it has a price of $100/share, then it has 100,000 shares outstanding. A buyout, merger or acquisition is based on the total value of the company, not based on the smallest unit of ownership in that company.
- lmm 10y agoAnd market cap alone is misleading without considering debt as well. But all that is technical nitpicking. The point is that the stock price is a measure that directly feeds into the overall value of the company that potential buyers etc. will consider.