What Is The Cost Of This Stock?

The Internet has empowered buyers to shop with comparative knowledge of prices. The price we pay for something should not be a mystery, surprise or disappointment.

When comparing prices for symbols it is important to understand the number of shares outstanding and the market cap.

Consider the price of XYZ vs ABC. Let's say we can buy XYZ for $4.00 per share and we can buy ABC for $40.00 per share. On the surface it is easy to say XYZ shares are $36.00 lower than ABC shares. But that does not necessarily mean XYZ shares are less expensive than ABC shares.

In this example, XYZ has 100,000,000 shares outstanding and ABC has 1,000,000 shares outstanding. XYZ, priced at $4.00 per share is trading at a value of $400,000,000 ($4.00 X 100,000,000 shares outstanding) while ABC, priced at $40.00 per share is trading at a value of $40,000,000 ($40.00 X 1,000,000 shares outstanding). On the surface XYZ value is $360,000,000 more than ABC, but this does not necessarily mean XYZ shares are more expensive than ABC shares.

Research is needed to answer the questions "Is the XYZ market cap worth $400,000,000" and "Is the ABC market cap worth $40,000,000?" The answers will vary based on numerous factors but hopefully it demonstrates to not select symbols based solely on the price per share.
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Financial Planner, a comprehensive and personal financial plan and all other components that make up your own financial situation.

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