Free Stock Market Course. Part 8: Market Cap

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Chapters:
00:00 What is Market Capitalization
00:23 Primary Market
02:41 Secondary Market
03:34 Market Capitalization
05:46 Why is Market Capitalization Important?
07:48 Perceived Risk versus Reward
08:44 Volatility
09:05 Liquidity
09:40 Misconceptions
14:21 Top 10 Biggest Stocks as of the End of 2020
Module 2 Section 7
What is Market Capitalization?
Primary Market
Initial Public Offering (IPO)
Going Public:
When a company wants to make shares available to investors.
An investment bank will help determine:
A company's value
The numbers of shares
The price per share
Example:
Company value: $100 million
Number of shares: 10 million shares
$10 per share
Initial market cap: $100 million
Secondary Market
After a company has an Initial Public Offering (IPO), shares are traded publicly in the stock market.
Prices are determined by Supply and Demand.
As the stock price increases or decreases, the market cap is determined.
Market Capitalization
Market Capitalization is the total dollar market value of a company.
Market Cap = outstanding shares X Price for one share
Definitions:
Mega Cap: $200 billion or more
Large Cap: $10 billion - $200 billion
Indexes:
DJX, SPX, NDX
Mid Cap: $2 billion to $10 billion
Indexes:
MID
Small Cap: $300 million to $2 billion
Indexes:
RUT/SML
Micro Cap ($50 million to $300 million) and Nano Cap (Below $ 50 Million)
Why is Market Cap Important?
People prefer to base things on size.
Large companies are thought to be less risky than smaller companies.
Size diversification
More established companies can offer more stability for earnings growth and dividends.
Smaller companies can offer greater growth potential.
Perceived Risk Versus Reward
Nano Cap
Micro Cap
Small Cap
Mid Cap
Large Cap
Mega Cap
Perceived Volatility
Nano Cap
Micro Cap
Small Cap
Mid Cap
Large Cap
Mega Cap
Perceived Liquidity
Mega Cap
Large Cap
Mid Cap
Small Cap
Micro Cap
Nano Cap
Misconceptions
Real Value (Enterprise Value):
Market Cap is what investors determine to be the value of a company.
Fundamental Analysis tries to determine Real Value (Enterprise Value).
If a company is purchased by another company, the price may be different than the market price.
Any company can vary in:
Price
Risk
Volatility
Top 20 as of the end 2020
1. Apple- $2.14 trillion
2. Saudi Aramco - $2.05 trillion
3. Microsoft - $1.61 trillion
4. Amazon- $1.56 trillion
5. Alphabet (Google) - $1.17 trillion
6. Tencent - $797 billion
7. Tesla - $783 billion
8. Facebook - $716 billion
9. Alibaba - $637 billion
10. Taiwan Semiconductor (TSMC) - $556 billion
11. Berkshire Hathaway - $548 billion
12. Samsung - $503 billion
13. Visa- $444 billion
14. JP Morgan Chase - $423 billion
15. Johnson & Johnson - $422 billion
16. Walmart - $409 billion
17. Kweichow Moutai - $388 billion
18. Proctor and Gamble- $334 billion
19. United Health - $333 billion
20. Nestle - $327 billion