Let’s suppose there are 500shares trading at $10. The market capitalization is 5000$.
One person now trades one share for 9$. There are still 500 shares around (if the company didn’t do a buyback) and now the market capitalization is 4500$. Where did the $500 go? Nowhere. The market cap just represents the perceived value of the company
I don’t think it’s entirely true:
Let’s suppose there are 500shares trading at $10. The market capitalization is 5000$.
One person now trades one share for 9$. There are still 500 shares around (if the company didn’t do a buyback) and now the market capitalization is 4500$. Where did the $500 go? Nowhere. The market cap just represents the perceived value of the company
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