crosses the $100 billion line

Aug 23, 2011

Until this year, only one Northwest based company has topped $100 billion dollars in market value: Microsoft. But now a second local company has crossed that line: Amazon. 

On this week’s Money Matters, financial commentator Greg Heberlein and KPLU's Dave Meyer talk about and the importance of market value.

For five trading days beginning in the last week of July, shares of this amazing online retailer hit at least $221 a share. That meant its total value bettered $100 billion.

What is market value and how is it calculated?

Market value is the total stock-market worth of a company. It is calculated by multiplying the total number of shares a company has outstanding times the current stock price. So if 1 million shares exist and the price is $10, the company has a market value of $10 million.

Why even care about market value?

  • First, it’s a meaningful way to compare the value of companies. Stock price is not an indicator. A company whose stock trades at $100 a share may be smaller than a company at $10 a share.
  • Second, some investors may be wary of smaller stocks. Small stocks can dominate percentage gain or loss charts, because a few pennies can count for more.
  • In addition, larger stocks are more widely known, because they usually have been around longer and are more widely held. Therefore, they get more media and stockbroker attention, which more often is a plus.

Money Matters” is a KPLU feature covering the economy, investments and more. The feature is published here and airs on KPLU 88.5 during Morning Edition and All Things Considered on the second and third Tuesdays of the month. It also airs on Weekend Saturday Edition.