I have been usually impressed with your military understanding, but am rather disappointed with this answer.
Shows you don't seem to know a lot about finance.
- No matter what is the absolute amount of shares, all share holdings ultimately add up to 100% of a company. So if a company has larger number of shares due to any reason, it just means the ownership claim over the company of each share is less.
- Public ownership through market is just that. Ownership. Not debt. This is the primary concept behind Equity. Can't understand how someone can get the basics wrong.
- What we are talking about is Market Valuation. Market valuation is the market's valuation of a company's stock and its net worth.
- Even if you were to talk about profitability, Alibaba is far more profitable than Amazon.
1.) 100% of Company Ownership, that does not mean 100% of what the company worth. IPO was done to a point I exchange the share of my company for money from public, it could be anything up to 49% of my own company stake, that is the layman term. However, that amount, or Absolute Amount, as you said does not mean anything to that company other than how much that company worth at that particular time, because I cannot sell them immediately and get what the "price" I am selling, nor can you use the "Market Cap" to operate a business. In short, Market Cap is an indication on how much a company worth without the most basic and most important information, which is market share and the business revenue.
In fact, if you are an investor, yes, Market Cap is a good indication on whether or not you want to invest in that company. But if you are talking about a company operation, it does not indicate much, and as per this article, it is talking about Business Operation. Not on an investment stand point.
2.) Public Ownership is a debt in accounting term, you owe your investor money (Which you will have to pay back when they sell your stock), that is what equity mean, and you are using your share as a security. Effectively, it is the same as you are borrowing someone's money to develop your company, in exchange, you give them some "Control" of the company. Unless you don't pay back your investor (meaning either they never allowed to sell your stock or you can have a choice not to pay them back when they sell your stock) you are having a debt payable for the stock amount on your balance.
3.) Look at what the OP talking about, he is talking about
HOW BIG A COMPANY IS, using Market Cap as an indication. If you don't know how wrong it was, then I think you are the one that don't have any knowledge in Finance. NB, just 10 hours later, Amazon is 5 billions ahead of Alibaba at the close of Oct 10 Trading day, so, does it mean Amazon is all of a sudden become "Bigger" than Alibaba again in just 10 hours??
4.) And no, I am not talking about profitability, I am talking about bankable. Which is a term include market share, profits, future dominance and so on. In fact, if you have any stock market knowledge, most bankable stock usually is not the one that make a lot of profit, blue chips (Such as Banks and other big corporation) make a lot of profits but they are not as bankable as other stock, such as technology company or company about new invention. Even for a same company, being bankable or not is not equal to how profitable it can get. Take apple for an example. Apple 20 years ago is more bankable than apple today, even tho the profit margin for apple is different today than it was 20 years ago, which is significantly less. The investment environment for apple is better 20 years ago than today.
And also, I am not talking about that, being bankable is used to refer to the market Cap, it have nothing to do with my point, which is how big a company was.
Also, I forgot to mention. Market Cap means everything.
If I own 10% of shares of a company that is valued at 200 billion dollars. Than the worth of those shares is 20 billion dollars, and I can raise that money by selling those shares in the market.
Again, that's from the point of view for an investor, but is it what the OP talking about?
HE IS TALKING ABOUT ALIBABA BEING A BIGGER COMPANY THAN AMAZON.
Seriously, how are you going to justify this statement using Market Cap as an argument, having more Market Cap equate to having a bigger company? How are you going to make it make sense? That I want to see.
