For public companies, market cap is the most important metric. So it’s the most substantial measure to me.
Profit is the number that really matters.
Theoretically that's how price targets are created by analysts. So market cap is explainable through that metric.
Profit this year and no growth vs. the same profit this year and double profits next year should lead to different market caps, and it generally does.
For a public company, it's all about return on investment, right? Market cap is the most important factor in return on investment right? Therefore, market cap is the most important measure.
Completely wrong. Hint: You are on HN. Startups obviously don't start at a large market cap.
I didn't say you should invest in companies already with a big market cap. I said market cap increasing is the ROI to investors (besides dividends, which is mostly irrelevant when investing in tech companies).
That's exactly how startups work. You invest at a cap of $50m. Its market cap increases to $1 billion. You just made 20x (provided you have liquidity).
Market cap should be equal to the expected discounted profit.
Market cap is one piece of a complicated picture. On its own, you don't know too much.
Why is market cap the most important metric? It does not exist in a void. Market cap + P/E or forward P/E, P/B, P/S, etc. are all metrics of high import.
When you're evaluating your ROI on tech stocks, the #1 factor is market cap delta between when you bought the shares and now.
Does that mean the market cap is worth $10k? yes. is that meaningful if there are no other buyers at $100? no.
There might be no buyers. There might be no buyers willing to buy at the last sold price. There might be no sellers willing to sell at the last sold price.
Market cap would be $10,000, but if there isn’t a single person willing to buy for that price, then is it worth that much,
https://finance.yahoo.com/markets/stocks/most-active/
So yes, Nvidia's market cap is meaningful. If the reported market cap is at $3.5t and you want to sell your shares, you can easily find someone else who values Nvidia at $3.5t to buy them.