Follow Tom's Hardware on Google News , or add us as a preferred source , to get our latest news, analysis, & reviews in your feeds.
Anton Shilov is a contributing writer at Tom\u2019s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-20/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Anton Shilov Social Links Navigation Contributing Writer Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
waltc3 Seems like I keep writing these to no avail…;) "Market cap" numbers do not tell you about a company, it's size, or it's total capitalization. Market cap is simply a figure that takes the current asking price per share and multiplies it by the total number of shares in circulation. It's an on-paper number that is usually used by brokers to entice the unlearned and/or unwary to use their services to buy the stock, to earn brokerage commissions. So why doesn't market cap describe the size or capitalization of a company? The answer is so simple I'm surprised by how often it is completely misunderstood or misrepresented. 1) The great majority of the shares used to compile the MC number are not owned by the company–those shares are not assets of the corporation, accordingly. Those shares are owned by the institutions and individuals who bought the stock at whatever price, who own the shares, and if those shares are sold at the MC figure per share, the money goes to the owners of the stock, not to the corporation. As such, they contribute nothing at all to capitalization, since those shares do not put any money into the corporation; and of course, since the majority of those shares are not corporate assets, but are owned outside of the company, they contribute no information as to the size of the company. 2) Why is MC a theoretical, on-paper number, only? Because every owner of the company's stock would have to sell all of his stock, today, at the current share price. And what happens to the share price of huge volumes of stock put up for sale at the same time? What happens is that the share price begins to fall like a rock in the face of "millions" of shares flooding the market simultaneously. It's a danger signal to investors in the company, in fact. So, For this reason, too, Market Cap is simply an impossible number , and it will never happen that all the outstanding shares will be sold at the same time for the highest asking price…;) That's why the number is misleading to begin with. And, then, as stated earlier, the proceeds from these sales go to the owners of the stock–not the company–so no corporate capitalization takes place. 3) Companies often do buy back some of their stock, which amounts to money going to the stock owners who sell it back to the company, at a minus to the company's coffers. They do this from time to time to raise the asking share price of the stock, and new buyers of the company stock at the asking share price do actually put money in the company. But this never, ever amounts to all the outstanding shares of company stock being sold immediately at the current share prices used in the MC figures. 4) Most stock transactions involve institutional and individual buying and selling to and from each other, and when profits are had, they accrue to the owners/sellers of the stocks, not to the company that originally issued the shares. Let's say that I own 5,000 shares of Company A, and that I paid $100 a share for them, and I want to sell 1,000 shares today, and I'm very lucky and get $300 a share for all of them, at that point I make a cool profit per share of $200, even if the asking share price for new company stock is $385 a share. The buyer saves $85 over buying shares directly from the company, and I make my nice profit on selling my shares to him, and the company makes nothing on the sales of those shares. I n reality, share price in buying and selling will only amount to whatever the market is willing to pay for said shares at the time–a lot like the difference between realestate appraisals and what someone is willing to pay…;). Reply
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/pc-components/cpus/SPONSORED_LINK_URL
- https://www.tomshardware.com/pc-components/cpus/amds-market-cap-hits-all-time-high-intel-hits-25-year-high-on-agentic-ais-insatiable-demand-for-cpus#main
- https://www.tomshardware.com
- SNK revives the mighty Neo Geo in modern form — new AES+ system plays classic games without emulation
- Strength and Destiny Collide: ‘Samson: A Tyndalston Story’ Arrives in the Cloud
- Blowing Off Steam: How Power-Flexible AI Factories Can Stabilize the Global Energy Grid
- Advancing Open Source AI, NVIDIA Donates Dynamic Resource Allocation Driver for GPUs to Kubernetes Community
- SNK revives the mighty Neo Geo in modern form — new AES+ system plays classic games without emulation
Informational only. No financial advice. Do your own research.