Basic Question about Tech Stocks with Large Market Cap

Discussion in 'Stock Market Today' started by CKS3, Nov 16, 2021.

  1. CKS3

    CKS3 New Member

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    Hi there,

    I’m new to investing in the stock market and I’ve been learning a lot in the past couple of weeks. I’m interested in investing in some of the large and reliable tech stocks (Apple, Microsoft, Facebook), and one thing that I’m confused about the following – why is the stock price for a company like Apple not higher if they occupy such a huge market cap? For example, I understand that Apple is one of the largest tech companies in the world (with a market cap of approx. 2.4 trillion) and the stock price hovers in the $150 range. I noticed that there are many companies that have significantly smaller market caps and higher stock prices (e.g. Autodesk - 72 billion market cap with $330 stock price,) – why is this?

    This might be a really basic question and I might not fully understand the fundamentals, but I’ve been having some difficulty finding a straight answer on the internet.

    Any response would be appreciated.

    Thank you.
     
  2. B Russ

    B Russ Well-Known Member

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    Think of it like slicing a pizza. U have a $20 pizza and if u cut it in half, each slice is worth $10. If you cut it into fourths, each 1/4 is worth $5. If u get 40 slices out of it, each slice is ¢50, and they all equal $20.

    its called share dilution. A company can offer as many or little shares as they want. Apple has split many many times over the yrs. thats also what a split does. If a company has 200 mil shares and they do a 2/1 split, they just increased to 400 mil shares to be traded, making more slices available, but smaller portion of the whole pizza, making them worth less individually.
    Hope this helps.
     

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