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Yelp Larger Than S&P 500 Component Advanced Micro Devices

In the latest look at stocks ordered by largest market capitalization, Russell 3000 component Yelp Inc (NYSE: YELP) was identified as having a larger market cap than the smaller end of the SP 500, for example Advanced Micro Devices, Inc. (NYSE: AMD), according to The Online Investor. Click here to find out the top SP 500 components ordered by average analyst rating »

Market capitalization is an important data point for investors to keep an eye on, for various reasons. The most basic reason is that it gives a true comparison of the value attributed by the stock market to a given company’s stock. Many beginning investors look at one stock trading at $10 and another trading at $20 and mistakenly think the latter company is worth twice as much — that of course is a completely meaningless comparison without knowing how many shares of each company exist. But comparing market capitalization (factoring in those share counts) creates a true “apples-to-apples” comparison of the value of two stocks. In the case of Yelp Inc (NYSE: YELP), the market cap is now $2.77B, versus Advanced Micro Devices, Inc. (NYSE: AMD) at $2.76B.
Click here to find out The 20 Largest U.S. Companies By Market Capitalization »

Below is a three month price history chart comparing the stock performance of YELP vs. AMD:

YELP,AMD Relative Performance Chart


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Another reason market capitalization is important is where it places a company in terms of its size tier in relation to peers — much like the way a mid-size sedan is typically compared to other mid-size sedans (and not SUV’s). This can have a direct impact on which indices will include the stock, and which mutual funds and ETFs are willing to own the stock. For instance, a mutual fund that is focused solely on Large Cap stocks may for example only be interested in those companies sized $10 billion or larger. Another illustrative example is the SP MidCap index which essentially takes the SP 500 index and “tosses out” the biggest 100 companies so as to focus solely on the 400 smaller “up-and-comers” (which in the right environment can outperform their larger rivals). And ETFs that directly follow an index like the SP 500 will only own the underlying component of that index, selling companies that lose their status as an SP 500 company, and buying companies when they are added to the index. So a company’s market cap, especially in relation to other companies, carries great importance, and for this reason we at The Online Investor find value to putting together these looks at comparative market capitalization daily.

At the closing bell, YELP is down about 0.8%, while AMD is down about 3% on the day Friday.

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Mystic Maggie

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