I’ll admit, I’m a bit of a statistics nerd, but I’m an extremely visual person as well. Everyday, we talk about, invest in, and shop at tons of different companies.
Often, we walk into these massive stores, and we just assume that they are these mega companies, but this is a reminder that there are bigger fish.
I wanted to see just how big some of these companies I deal with all the time really were in relation to one another, and I have to say that I’m surprised. I made the above graph of the following companies (chosen arbitrarily):
What Is Market Capitalization?
To keep it short, you can think of market capitalization as a company’s perceived net worth. The market, on a nearly daily basis, trades stocks and the price fluctuates. If you take the stock’s price, and multiply it by the number of shares outstanding you have the Market Capitalization.
This is the market determining the overall value of a company, and this is the metric I used in the graph above. Yes, market capitalization really is that easy!
Stock Price, Duh!
Some people might look at this graph and think “Apple’s stock price is $560.00 per share, of course they are the biggest company on the list!” Stock prices are meaningless. As of this writing, Berkshire Hathaway (Warren Buffett’s Company) has a stock price of $119,700 per share (BRK.A), yet their market capitalization is roughly half of Apple’s.
What Surprised Me
I guess what surprised me most was the fact that I walk into these gigantic Target stores, and I just assume Target would be as big on a graph as they would be compared to other companies I deal with. I wouldn’t have thought Wal-Mart to be 6 times bigger than Target.
Another one that surprised me was Amazon. I have such a huge image of this company in my mind. They are everywhere, I purchase from them all the time, I research products with them before purchasing, and I just expected them to have a larger presence on such a graph.
What Does This All Mean
Honestly, it is just neat “did you know” knowledge to share with other people, and maybe a decent primer to market capitalization for any rookie investors out there. Sometimes, I get terribly curious and I make things like this to answer my questions. This one certainly answered my questions, and it surprised me as I hoped it would have. (I know, I’m a nerd, I accept that)
What do you think, did one of the companies surprise you? Do you ever have bigger views, or a smaller views of companies that end up surprising you? Let us know in the comments!