Market value definition

Market value is the price that buyers and sellers will accept for an asset in an open market. It reflects what the market judges an asset to be worth right now, not what the accounts record.

Market value applies to stocks, bonds, real estate, commodities, and whole companies. For a listed company, market value is usually measured as market capitalisation, the share price multiplied by the number of shares outstanding, and it moves with supply, demand, earnings expectations, and interest rates.

Market value differs from three related measures. Book value is the asset's worth on the balance sheet, taken as cost less depreciation; fair value is an estimated price under orderly conditions; intrinsic value is an analyst's estimate of true worth from fundamentals. Market value is simply the price the market sets today, which can sit above or below all three.

Market value Example

A company has 10 million shares outstanding, and its stock trades at USD 25 per share.

Its market value, or market capitalisation, is:

10,000,000 √ó USD 25 = USD 250 million

The company has a market value of USD 250 million at the current share price.