IMO when comparing companies, the actual share price doesn't matter except for two reasons -- psychological effects; and many institutions have rules about margins and ownership for stocks under a certain price.
When comparing two companies, what matters is the market cap, not the share price, because that is the proper measure for what a company is evaluated as being worth.
If company A's market cap is twice company B's, it is worth twice as much, irrespective of their share prices, because that is an epiphenomenon of how many shares among which the market caps are divided.
Here's another try. Let's says two companies both have a deposit with about the same amount of contained metal, and they are situated right beside each other, are at the identical stage of development, and have equally competent management.
But if company A has 10 times as many shares out as company B, their share price should be 1/10 that of company B, even thought they are valued the same by the market.
In this case, the fact that company B's share price is ten times as much as company A's is meaningless, and one would be foolish to base any investing decisions on that difference absent those psychological factors I mentioned.
For example, it should be exactly as hard for company A's pps to go from, say, 50 cents to a buck, as it would for company B's to go from $5 to $10.
Why? Because if both companies double in value, their share prices will also both double, by definition, and the share price itself has nothing to do with why each doubles or not.
One last try. Let's say I gave you $100 in dollar bills to share with nine friends, so you get 10 bills apiece. If the pot was instead $200, you would get 20 dollar bills apiece.
Now let's say I instead gave you $100 in ten dollar bills, so you just get one apiece. If the post is doubles, you now get 2 bills.
But the doubling get you to the same place each time. It doesn't matter in the slightest whether you end up holding one more ten dollar bill or 10 more dollar bills.
LC |
