Is a $500 stock "expensive"?

Here's a question that trips up almost every beginner. Stock A costs $500 per share. Stock B costs $20. Which company is more expensive?

Answer: you can't tell. And understanding why is one of the most useful clicks in your market education.

Price per share is an arbitrary slice

Companies choose how many shares to divide themselves into. Cut a pizza into 8 slices or 32 — the pizza doesn't change; the slice does. A $500 share of a company cut into 100 million pieces can be a slice of a SMALLER business than a $20 share of a company cut into 5 billion pieces — the price tag tells you the size of the slice, never the size of the pizza.

The number that compares whole companies is market capitalization ("market cap"):

market cap = share price × number of shares

A $20 stock with 5 billion shares is a $100 billion company. A $500 stock with 100 million shares is a $50 billion company — half the size, despite a share price 25 times higher.

If the price tag itself is the obstacle, most large brokers now sell a fraction of a share, so €50 buys one tenth of a €500 share with the same claim on profits and dividends, scaled down. Two limits come with it: the fraction usually carries no vote, and it usually cannot be moved to another broker, only sold. A whole share is the unit the exchange trades; the fraction exists inside your broker's books.

Splits: same pizza, more slices

Sometimes a company decides its share price looks too heavy and splits every share into several. In 2020 Apple did a 4-for-1 split: every owner woke up with 4 shares, each worth a quarter of the old price. Nothing about the company changed — same market cap, same business, same total value per owner. Prices you see in long-term charts are usually adjusted for splits, a data detail you'll appreciate in the data-literacy unit ahead.

So when IS a stock expensive?

"Expensive" in markets means: the price is high relative to what the business earns or owns — not relative to other price tags. That comparison (price vs. earnings, the famous P/E ratio) opens the door to valuation, and it has its own course in the Fundamental Analysis domain. For now, one habit: whenever you hear "that stock is cheap," translate it to "cheap compared to what?"

In the data

Market cap has a history of its own. Here is Apple's through July 2026:

Look at the dates before the values: the points are a week apart, not a day. A market-cap history is usually recorded weekly, so it never lines up row for row with a daily price chart, and a "market cap on the 15th" may simply not exist as a point. Between two points the value moves with the share price, because the share count hardly changes in a week.

Try it now

1. Get the comparison number for your anchor company: its market cap, which is share price times share count — the size of the whole company rather than the size of one slice. Apple's is below.

2. Now find a company with a HIGHER share price but LOWER market cap. They are everywhere once you look. Below are five US companies just under ten billion dollars, the largest first, each with its share price and its market cap, so you can spot one by scanning two columns.

3. Divide each of those two market caps by its own share price. What comes back is the share count — how many slices that company cut itself into, and the whole reason one price tag is bigger than the other. Write both counts down. If the company with the higher price does not have the smaller count, you have picked two companies that differ in size rather than in slicing, and the pair you want is one row further down the list.
4. Say it out loud, once: "share price alone tells me nothing about size or value." That sentence quietly puts you ahead of most first-year retail investors.
5. Go back to Apple's market-cap history above. Count the days between consecutive dates, then divide the last value by the share count in step 1: the answer is roughly the share price on that date, which is the multiplication run backwards.

Checkpoint next: a short quiz on Unit 1, then we follow your money — what actually happens when someone presses "buy".