few days ago I read in google reader "news" that a friend had shared so that their contacts to see. I can not remember the exact title, but the post highlighted as an important event for the first time the share price of Red Hat had exceeded the price per share of Microsoft, and tried to explain the importance of this fact. No surprises me the ability to misinform that has the Internet, nor ceases to amaze me how a free software enthusiast can become the greatest enemy of Free Software and its distribution, a lot of momentum and emotion, but sometimes very little brain.
In short, this led me to write this post trying to give a simple explanation for the lack of relevancy that stock prices when comparing 2 companies in the stock market and why a share to $ 50 may prove to be cheaper one of $ 10.
First, the share price has no value compared to another stock price and therefore no use to compare companies. There are two reasons for this, la primera es que el precio de la acción esta en constante cambio, y la segunda y más importante, es que cada empresa tiene un número distinto de acciones. Para poder evaluar entonces el tamaño de una empresa se debe recurrir a la capitalización de mercado (market capitalization). Este número se obtiene multiplicando el precio por acción por la cantidad de acciones en el mercado de esa empresa. Este valor indicaría de una manera un tanto más real el valor total de la empresa.
Por ejemplo, si una acción valiera $50 dólares y la empresa tuviera 50 millones de acciones la capitalización de mercado de la empresa serían $ 2.5 miles de millones de dólares. Claro, este número por si sólo is not significant, in order to start some kind of analysis should start by comparing it with other companies in the same industry and similar size, so you can know if the company is a major player or is relatively small.
Other methods of valuing companies, such as the capital value of the company, or the use of methods of value added or profit expectations, but these issues are beyond the focus of this post.
Returning to the subject presented at the beginning, the share price of Red Hat is now $ 27.49 per share, that of Microsoft, $ 28.02 per share, much like it? Nothing wrong, Red Hat has a maket cap of $ 5.16 billion dollars, while Microsoft is on the $ 249.68 billion. What do you mean? Red Hat is approximately 2% of the total size of Microsoft. So really care about the price per share to show that the Free Software companies are moving?
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