Starting out
Share
One unit of ownership in a company — the smallest slice of its equity you can hold.
How it works
A company divides its ownership into a number of shares. Hold 1,000 of the 100 million shares in issue and you own one ten-thousandth of the company: one ten-thousandth of its profits, its assets and its votes.
The share price on its own tells you almost nothing about how big or expensive a company is. What matters is the price multiplied by the number of shares — the market capitalisation — and how that compares to what the business earns.
Where it misleads people
A $5 share is not "cheaper" than a $500 share. A company can create the $5 price simply by issuing a hundred times more shares. Comparing share prices between companies is comparing slice sizes, not pizza sizes.
Related terms
- EquityA share of ownership in a company, giving you a claim on what is left after everyone else is paid.
- Market capitalisationWhat the market says a whole company is worth: the share price multiplied by the number of shares.
- Stock splitDividing existing shares into more, smaller shares, leaving the total value unchanged.
- Shares outstandingThe total number of a company’s shares currently held by all its investors.
More in Starting out
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.