Believe it or not, the price of a stock does not actually dictate how much it is worth. A $2 stock can be worth more than a $50 stock. The easiest way to find out how much a company is actually worth on the open market is to multiply the share price by the outstanding shares (or any shares currently owned by anyone other than the company itself). This is known as market cap, short for market capitalization.

To use the previous example, lets say the $2 stock has 50 million shares outstanding, and the $50 stock only has 1 million shares outstanding. Just multiply like so:

Company A- $2 share price x 50 million shares = $100 million market cap.

Company B- $50 share price x 1 million shares = $50 million market cap.

As you can see, Company A’s share price is only 1/25 of Company B’s share price, yet Company A is worth twice as much as Company B in the open market.