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Why aren't they comparable? They are two amounts of money. I can compare my mortgage payment to the cost of Apples, or how much my monthly phone bill is in oran
by CJefferson 8y ago
Why aren't they comparable? They are two amounts of money. I can compare my mortgage payment to the cost of Apples, or how much my monthly phone bill is in oranges.
- mkirklions 8y agoBecause market cap is Number of outstanding shares * current market price. If Apple sold 90% of their shares in a day, the price would be close to 0.
- che_shirecat 8y agominor nitpick, but Apple (the publicly traded corporation) by definition does not own any shares outstanding and therefore would have none to sell. But yes, if 90% of Apple shareholders sold in a single day, something would be terribly wrong.
- thedufer 8y agoNo, they have different units. GDP is measured in currency/time (the denominator is usually a year) whereas market cap is measured in currency. Think about how much sense it makes to say "200 miles? That's about as far as the top speed of a Nascar car!" There's kind of a valid comparison happening, but it requires the reader to correctly guess the time period you're talking about for the speed.