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Company A issues 100 stocks and sells each one for $100. Company A has a $10,000 market cap. Investor X sells a share of Company A to Investor Y for $110. Co
by htag 4y ago
Company A issues 100 stocks and sells each one for $100. Company A has a $10,000 market cap.
Investor X sells a share of Company A to Investor Y for $110. Company A now has a market cap $11,000 because each of their 100 shares are now valued at $110.
Investor Y sells the share of Company A, but can only find a buyer (Investor Z) willing to pay $90. Company A now has a market cap of $9,000 because each of their 100 shares are valued at $90.
- pixelmonkey 4y agoVery nice, concise, and de-jargoned explanation of how value is “created” and “destroyed” in stock ownership. Also, here is a relevant Gordon Gekko quote from "Wall Street": "Money itself isn’t lost or made, it’s simply transferred –- from one perception to another."[1] [1]: https://amontalenti.com/2011/12/16/wall-street-the-movie-25-years-later https://amontalenti.com/2011/12/16/wall-street-the-movie-25-...