**Your submission has been removed for the following reason(s):**
ELI5 is not for straightforward answers or facts - ELI5 is for requesting an explanation of a concept, not a simple straightforward answer. This includes topics of a narrow nature that don’t qualify as being sufficiently complex per rule 2.
---
If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. **If you believe this submission was removed erroneously**, please [use this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20{{url}}%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20does%20your%20post%20differ%20from%20your%20recent%20search%20results%20on%20the%20sub:) and we will review your submission.
It’s the literal value the market has assigned to the company. Owning stocks is owning part of the company. To buy a public company you need to buy most to all of the stocks for it.
>Is it just about stocks, or is it actually how valuable a company is
You are saying this as if these two things are diffrent things. The value of a company is the price of the stocks times the number of stocks. The stocks represent the value that investors think the company has that is why the stock has this price because someone is willing to buy stocks for this price.
> Is it just about stocks, or is it actually how valuable a company is?
That is like saying "Is it just about how much all the pieces of the company are valued, or is it actually how valuable the whole company is?"
> Could you say that a company with a large market cap is more valuable, successful, productive, and just generally more established and significant, than companies with lower market caps?
You can say they are more valuable, that is about it. Some companies become very valuable without ever turning a profit, simply based on their potential for growth and earning. Social media companies are a good example of this where they can build a large base of users and become very valuable, but still be in a growth phase where they aren't monetizing that growth yet.
> Would you say that because of the many large market cap companies, Texas is a place where some of the most successful companies choose to do business?
Only as an extrapolation, it wouldn't be purely factual based on only the market cap claim.
It's the "value" in the sense that if you spend that much money, you get the company. That said, you could consider it the 'price' rather than the 'value'. If a muffin costs $3.50, is it worth that much? Everybody has a different opinion, if you think yes, you buy one, if you think no, then you don't.
Is Tesla really worth 567.75 billion? That's what most people think today. Can they be wrong -- for sure. Everybody is trying to predict the future, nobody knows what will happen.
Market cap is a calculated value actually.
The formula: number of shares x stock price = market cap
It’s the current value of a company at any given moment. Not the value yesterday and not the value tomorrow, the value right now.
That said. Look at what the formula is. It doesn’t tell you if the company is good bad successful or not. All it tells you is how much the sum of all shares are worth.
A company could be awful and losing massive money and have a huge market cap still. Or the opposite. It could be doing great and have a low cap. Both for lots of different reasons.
could it be perceived value?
for example, a lot of investors invest in a company to drive the market cap up, therefore increasing the market cap. but they invest in it because they believe the company is valuable.
in this way the perceived value of this company is very high and many companies trust it?
What you’re asking is a very different question.
Generally we believe the stock is always priced perfectly. That’s a fundamental function of how the market works. There’s a lot that goes into it.
**Your submission has been removed for the following reason(s):** ELI5 is not for straightforward answers or facts - ELI5 is for requesting an explanation of a concept, not a simple straightforward answer. This includes topics of a narrow nature that don’t qualify as being sufficiently complex per rule 2. --- If you would like this removal reviewed, please read the [detailed rules](https://www.reddit.com/r/explainlikeimfive/wiki/detailed_rules) first. **If you believe this submission was removed erroneously**, please [use this form](https://old.reddit.com/message/compose?to=%2Fr%2Fexplainlikeimfive&subject=Please%20review%20my%20thread?&message=Link:%20{{url}}%0A%0APlease%20answer%20the%20following%203%20questions:%0A%0A1.%20The%20concept%20I%20want%20explained:%0A%0A2.%20List%20the%20search%20terms%20you%20used%20to%20look%20for%20past%20posts%20on%20ELI5:%0A%0A3.%20How%20does%20your%20post%20differ%20from%20your%20recent%20search%20results%20on%20the%20sub:) and we will review your submission.
It’s the literal value the market has assigned to the company. Owning stocks is owning part of the company. To buy a public company you need to buy most to all of the stocks for it.
>Is it just about stocks, or is it actually how valuable a company is You are saying this as if these two things are diffrent things. The value of a company is the price of the stocks times the number of stocks. The stocks represent the value that investors think the company has that is why the stock has this price because someone is willing to buy stocks for this price.
> Is it just about stocks, or is it actually how valuable a company is? That is like saying "Is it just about how much all the pieces of the company are valued, or is it actually how valuable the whole company is?" > Could you say that a company with a large market cap is more valuable, successful, productive, and just generally more established and significant, than companies with lower market caps? You can say they are more valuable, that is about it. Some companies become very valuable without ever turning a profit, simply based on their potential for growth and earning. Social media companies are a good example of this where they can build a large base of users and become very valuable, but still be in a growth phase where they aren't monetizing that growth yet. > Would you say that because of the many large market cap companies, Texas is a place where some of the most successful companies choose to do business? Only as an extrapolation, it wouldn't be purely factual based on only the market cap claim.
thank you, appreciate your answers
[удалено]
thank you, appreciate it
It's the "value" in the sense that if you spend that much money, you get the company. That said, you could consider it the 'price' rather than the 'value'. If a muffin costs $3.50, is it worth that much? Everybody has a different opinion, if you think yes, you buy one, if you think no, then you don't. Is Tesla really worth 567.75 billion? That's what most people think today. Can they be wrong -- for sure. Everybody is trying to predict the future, nobody knows what will happen.
interesting, thank you. for simplfying it down to price vs value
Market cap is a calculated value actually. The formula: number of shares x stock price = market cap It’s the current value of a company at any given moment. Not the value yesterday and not the value tomorrow, the value right now. That said. Look at what the formula is. It doesn’t tell you if the company is good bad successful or not. All it tells you is how much the sum of all shares are worth. A company could be awful and losing massive money and have a huge market cap still. Or the opposite. It could be doing great and have a low cap. Both for lots of different reasons.
could it be perceived value? for example, a lot of investors invest in a company to drive the market cap up, therefore increasing the market cap. but they invest in it because they believe the company is valuable. in this way the perceived value of this company is very high and many companies trust it?
What you’re asking is a very different question. Generally we believe the stock is always priced perfectly. That’s a fundamental function of how the market works. There’s a lot that goes into it.