What is the difference between stock price and market value?

There is a big difference between the two. The stock's price only tells you a company's current value or its market value . So, the price represents how much the stock trades at—or the price agreed upon by a buyer and a seller. If there are more buyers than sellers, the stock's price will climb.

What does a stock price mean?

A stock's price indicates its current value to buyers and sellers. The stock's intrinsic value may be higher or lower. The goal of the stock investor is to identify stocks that are currently undervalued by the market. Some of these factors are common sense, at least superficially.

Is a share price a sign of value?

The opposite also could be true as well, but the share price alone is no sign of value. Market capitalization is a clearer indication of how the company is valued and gives a better idea of the stock’s value. Also known as market cap, it's listed with every stock's price quote.

What happens if a stock is cheap or expensive?

A stock is cheap or expensive only in relation to its potential for growth (or lack of it). If a company’s share price plummets, its cost of equity rises, also causing its WACC to rise. A dramatic spike in the cost of capital can cause a business to shut its doors, especially capital-dependent businesses such as banks.