✅ Why Stock Price Doesn’t Matter ❗ Stock Market For Beginners ✅

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Why the price of a stock doesn’t matter, stock market for beginners. Let’s go over why the stock price is the least important factor when valuing a stock. The price of a stock is determined by how many shares the company wishes to have in the stock market. This means the price could be any number they want it to be. A lower priced stock can have the same value as a higher priced stock. Comparing Apple stock at a 1 trillion dollar market cap, to Google stock at a 800 billion market cap, we can see why the stock price doesn’t matter. Apple stock is $220 while Google stock is $1000, 5 times as expensive, but Google is worth less overall. A cheaper $10 stock might only make 10% a year in profits, while a more expensive stock might make 100% a year in profits, the $100 stock would be worth a lot more even though it costs more per stock. Low priced stocks do tend to be higher risk companies which might explain why they double more often than higher priced companies, but this means they have more chances of losing money as well. It’s better to own one share of a good company than a thousand shares of a bad company. Instead of looking at the price of stocks, look at their market cap. To value a stock we can look the price to earnings ratio to see how much they’ve earned in profits. The higher the profits, the more of a value the company. We also have to look at growth in the company, a company growing 50% a year would go up in price much faster than a company growing 20% a year. This is why companies like Nvidia stock might go up 1000% while Intel only went up 100%, even though Intel has a better valuation. As a beginner in the stock market, make sure to look at more numbers than the stock price.

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