Boston, MA 08/19/2014 (wallstreetpr) –According to reports, Expedia Inc (NASDAQ:EXPE) has taken over the #380 spot from the NRG Energy Inc (NYSE:NRG). It was first reported by The Online Investor. As soon as the news came out, shares of EXPE experienced a significant surge.
What’s the main reason behind EXPE’s growth:
Expedia Inc (NASDAQ:EXPE) has taken over the #380 spot from NRG Energy Inc (NYSE:NRG) on the basis of underlying components of the S&P 500 that are ordered by the largest market capitalization. Although there are other ways that can be used to determine the size of the company, but none of them can give as accurate results as market capitalization. It is very important for all the investors due to various reasons. The most important among all those reasons is that it gives a fair comparison of the value that is attributed by the stock market to the stock of a given company.
Most investors don’t read the market data carefully. For example, if stocks of two companies A and B are trading respectively at $30 and $40, then it doesn’t mean that the latter one is bigger in size from the earlier one. Those who think that B has better market cap than the A can never draw a correct conclusion. Unless the number of outstanding shares of each company is known, no one can decide which company is bigger in size A or B.
At the same time if the market capitalization figures of two companies are compared, then the results attained are accurate. In the case of Expedia Inc (NASDAQ:EXPE), the latest market capitalization is $9.84 billion while the market capitalization of NRG Energy Inc (NYSE:NRG) is $9.81 billion. It gives a true comparison between these two companies and can clearly tell which company should be put on a higher rank. Market capitalization helps the investors to make a decision as which company they should pick from the investment perspective on the basis of current market situation.
