The next night brings you a brief overview to expand your knowledge more.

What is market value?

Market value is the total value of the company as seen by the market, and it is calculated with a simple formula:
Market value = share price × number of issued shares

Example:
If a company’s share price is 50 Saudi riyals and it has 10 million issued shares, then its market value = 500 million Saudi riyals..

Why is it important?
Market value tells you the company’s real size, not the share price.
Because many fall into a common mistake: they think that a share priced at 10 riyals is “cheaper” or a “better opportunity” than a share priced at 500 riyals… and this is a big fallacy.
The share price alone means nothing, because it depends on the number of issued shares.
A smaller company may have a higher share price, while a giant company may have a lower share price.

Classifications of companies by (market value)

Mega companies: more than 500 billion riyals (example: Aramco)
Large companies: from 20 - 500 billion riyals (example: Al Rajhi / SABIC / stc).
Mid-sized companies: from 5 - 20 billion riyals (example: most companies in the market).
Small companies: less than 1 billion riyals.

How can you benefit from this as an investor?

Large companies are often more suitable for those seeking stability and regular dividend distributions..
Small companies have greater growth opportunity, but with higher risks and stronger price volatility..
Diversifying across different company sizes reduces the overall portfolio risk..
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