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Equity, shares, and market cap
When you buy a stock, you are not betting on a number going up. You are buying a small, legal slice of a real business — its factories, patents, brand, employees, distribution agreements, cash in the bank, and the steady stream of profits it expects to generate for the next twenty years and beyond. If you hold 100 shares of Apple and Apple has 15.3 billion shares outstanding, you legally own about 0.0000007% of every Apple Store, every iPhone shipped, every dollar of cash on the balance sheet, and every future iPhone yet to be designed. That is the single most important mental shift in this entire curriculum.
A divides its ownership into shares. Each share is a tiny, legally identical fraction of everything the business owns and everything it owes. If a company has issued one million shares and you hold a thousand of them, you own one tenth of one percent of that business — the same one tenth of one percent of its inventory, its land, its brand, its software, and its profits. Buy one more share and you own a slightly larger slice. Sell some and your slice gets smaller. The math is exact, even if the dollar amounts at typical retail-investor scale feel abstract.
Three things, in plain language. First, an — a proportional claim on the company's profits. If Apple distributes a dividend, every share gets the same amount per share, so your slice grows by your fair share. Second, a on major corporate decisions. Third, a on the assets if the company is ever wound down. Common stockholders are last in line behind creditors, but they own whatever is left. This is what 'equity' technically means — what's left over after every other claim has been honored.
There are some bookkeeping terms worth knowing without overdoing them. is the total count. is the portion of those shares actually available to public buyers — insider lockups, founder stakes, and large institutional holdings reduce the float below the total. are shares the company has bought back from the market and is holding itself; they don't vote or earn dividends. None of this changes the fundamental fact: you own an equal slice of the company per share you hold, regardless of who else owns the rest.
is the share price multiplied by the number of shares outstanding. It is the market's vote on what the entire business is currently worth as an equity proposition. Microsoft at $420 a share with about 7.4 billion shares outstanding has a market cap of roughly $3.1 trillion. Apple at $190 a share with about 15.3 billion shares outstanding has a market cap of about $2.9 trillion. Microsoft's share price is more than twice Apple's, yet the two companies are roughly equivalent in size. The most consequential beginner habit to break, before any other, is the urge to compare share prices across companies. Share price alone is meaningless. Share price multiplied by share count is meaningful. The next stocks-by-share-price headline you read should make your eye twitch.
By early 2025, several U.S. companies were individually worth more than the entire stock markets of most countries. These are fixed reference figures — exact market caps move daily as prices change. The teaching point is the relationship between share price and company size, not today's precise number. Two companies on this list (AAPL and AMZN) had nearly identical share prices yet very different total values; share price alone tells you nothing.
Some companies have multiple share classes. Berkshire Hathaway has Class A shares (BRK.A, around $700,000 per share, with more votes) and Class B shares (BRK.B, around $460 per share, with diluted voting rights). They represent claims on the same underlying business; the price difference reflects the share-count split (1 BRK.A is economically equivalent to about 1,500 BRK.B shares). Alphabet has GOOG and GOOGL, the difference being voting rights. Multi-class structures are common where founders want to keep control after going public. The underlying business is one business; the share classes carve up voting and economic rights differently. When you compute market cap, you sum across all classes.
These early-2025 reference figures show why share price alone never tells you company size. Berkshire's roughly $700,000-per-share price does not make it 'more expensive' than Apple — it simply has far fewer shares outstanding. Always compare market caps, never share prices.
| Company | Share Price | Shares Outstanding | Market Cap |
|---|---|---|---|
| Berkshire Hathaway (Class A) | ~$700,000 | ~600,000 | ~$420 billion |
| Apple | ~$190 | ~15.3 billion | ~$2.9 trillion |
| Amazon | ~$200 | ~10.5 billion | ~$2.1 trillion |
| Chipotle (post-split) | ~$55 | ~1.4 billion | ~$77 billion |
This is what one share of AAPL represents in 2024 dollars, using Apple's FY2024 10-K (filed November 2024) as the source. If you hold 100 shares, you own about 0.0000007% of every figure on this card — the cash, the revenue, the profits, the brand, the supply chain. The Stock Analysis tab on the platform shows the same numbers refreshed live for any ticker.
Every stock page on the platform displays this in the header card the moment you open it: current share price, market cap, enterprise value, shares outstanding, and float. The Snapshot widget on the Stock Analysis tab puts annual revenue, net profit, cash on hand, and EPS side-by-side with market cap so you can see at a glance what you'd be buying a piece of. The /screener page lets you filter by market cap range — a useful sanity check when comparing companies of comparable size rather than companies that happen to have similar share prices. None of these numbers require interpretation; they're arithmetic on the company's reported share count and the live market.
The first is the comparison trap. 'Apple at $190 looks cheap; Berkshire's Class A at $700,000 looks insanely expensive.' Both statements are nonsense. Apple's market cap is roughly seven times Berkshire's; the share-price gap is purely a function of how each company chose to slice its ownership. The second is the share-count trap. A company with $50 billion in market cap and $30 billion in cash is far smaller in EV terms than a company with $50 billion in market cap and $30 billion in debt — but both look 'identical' if you just glance at market cap. Always check the enterprise value before deciding what a company is actually worth. And before you ever say 'I think AAPL at $190 is overpriced,' force yourself to articulate what total dollar value you think the entire business is worth — and compare that to its current market cap. If you can't, you're not pricing the business; you're guessing at a number.
Whenever Charlie and I buy common stocks for Berkshire's insurance companies (leaving aside arbitrage purchases) we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale.