Book Value vs Market Value: The key difference

Paulina Likos

Sep 8, 2020

These metrics can be used independently and together when valuing a company's stock.

A company's market value is the value of a stock traded on public markets. It's the cost or financial worth of a company according to the financial markets, otherwise viewed as the price shareholders are willing to pay for a company's stock. Market value determines the maximum price at which a stock can be bought and can be calculated at any point.
The market value changes constantly in the marketplace, says Stephen Akin, investment advisor at Akin Investments in Biloxi, Mississippi. "The stock of a company may change rapidly depending upon company developments and market conditions," he says.

The factors that go into calculating this measurement are the stock's market price and the outstanding number of shares. By multiplying both of these figures, investors determine the company's market capitalization, or the market value of a company: