Additional info: Market capitalization
Market capitalization, also known as stock market value, is the total value of issued shares of a publicly traded company. It is equal to the share price multiplied by the number of shares outstanding. It applies only to publicly traded companies or companies that have made their stock market debut, also known as an initial public offering or IPO.
Due to the nature of the capitalist system and the practice of buying and selling stock in public markets, market capitalization can be used as a proxy for the wider public’s opinion of a company’s net worth, making it therefore a determining factor in calculating other theoretical values of companies and their stocks: for example, stock valuation. Although market capitalization of stock markets and economic regions can be used as a comparison against other economic indicators, it reflects only the equity value of a company. The equity value does not take into account the firm’s choice of capital structure, which has a great influence on how a company allocates between equity and debt.