What Are the Most Expensive Stocks by Share Price?
Unpack the meaning behind high stock share prices. Learn why some companies have expensive shares and how stock splits impact them.
When people hear “expensive stocks,” they often think of overvalued companies. However, in finance, an “expensive stock” primarily refers to a share with a high per-share price. This price is merely the cost of one unit of ownership, not an automatic indicator of a company’s size, financial health, or investment quality. It reflects a fraction of a company’s total value, a key distinction for investors.
What a High Stock Price Means
A stock’s per-share price is just one component in assessing a company’s true scale. Market capitalization, or market cap, is a more comprehensive measure of a company’s total value. It is calculated by multiplying the current share price by the total number of outstanding shares, providing a holistic view of the company’s market valuation.
For example, a company with a $100 share price and 10 million shares outstanding has a $1 billion market capitalization. Another company with a $1,000 share price but only 500,000 shares outstanding has a $500 million market capitalization. This illustrates that a company with a lower individual share price can be significantly larger in overall market value than one with a higher share price.
Companies with High Share Prices
Several well-known public companies are recognized for their high individual share prices. Berkshire Hathaway’s Class A shares, an investment conglomerate, consistently command one of the highest prices. NVR, a homebuilding and mortgage banking company, also maintains a high per-share price. Seaboard Corporation, involved in agricultural and transportation businesses, is another entity known for its elevated stock price.
The list of companies with the highest share prices is dynamic, as stock prices fluctuate daily based on market conditions and company performance. These examples illustrate companies that have historically sustained high per-share values. High individual share prices do not necessarily mean they are the largest companies by market capitalization, a concept distinct from a single share’s price.
Reasons for High Share Prices
A company might have a high per-share stock price due to several factors. One reason is a limited number of shares issued from inception. If a company initially releases few shares, and its overall value grows substantially, the price per individual share will naturally increase to reflect that expanding value.
Another factor is a company’s deliberate policy regarding stock splits. Some companies choose not to split their stock, allowing the per-share price to climb continuously as value appreciates. This can be a strategic decision, as seen with Berkshire Hathaway, which historically resisted splitting shares. Such a policy allows the share price to grow alongside profitability and market perception.
Strong and consistent financial performance also plays a role, with robust earnings and revenue growth driving up the perceived value of each existing share. When a company consistently performs well and does not issue new shares frequently, demand for its limited existing shares can push the price upward. This combination of limited supply and high demand contributes to a higher per-share cost.
Stock Splits and Share Price
A stock split is a corporate action where a company increases its outstanding shares by dividing existing shares into multiple new shares. For instance, in a 2-for-1 split, each existing share divides into two. In a 3-for-1 split, one share becomes three.
The primary effect of a stock split is a proportional decrease in the per-share price. If a stock trading at $100 undergoes a 2-for-1 split, the price per share adjusts to $50. Despite this change in share count and price, the company’s overall market capitalization remains unchanged, and the total value of an investor’s holdings stays the same.
Companies often perform stock splits to make shares more accessible to a broader range of individual investors by lowering the per-share price. This can also increase stock liquidity, making it easier to buy and sell. While total investment value does not change immediately after a split, increased accessibility can sometimes lead to higher demand and trading activity.