KNOWLEDGE CHECK Which company is worth less

KNOWLEDGE CHECK Which company is worth less, Coca-Cola or Pepsi? Coca-Cola because it has a lower market capitalization Pepsi because it has a higher price per share Pepsi because it has a lower market capitalization Coca-Cola because it has a higher price per share Click to open/close each chart (la bola

The correct answer and explanation is:

The correct answer is: Pepsi because it has a lower market capitalization.

As of February 14, 2025, The Coca-Cola Company (ticker: KO) has a market capitalization of approximately $298.98 billion, while PepsiCo, Inc. (ticker: PEP) has a market capitalization of about $198.29 billion. citeturn0search1

Market capitalization, often referred to as “market cap,” is calculated by multiplying a company’s current stock price by its total number of outstanding shares. It provides a comprehensive measure of a company’s total market value, reflecting investor perceptions of its future prospects and overall valuation.

It’s important to note that a higher stock price per share does not necessarily indicate a higher market capitalization. For instance, as of February 14, 2025, PepsiCo’s stock is trading at $144.25 per share, while Coca-Cola’s stock is priced at $69.28 per share. Despite PepsiCo’s higher stock price, its overall market capitalization is lower than that of Coca-Cola. This discrepancy arises because Coca-Cola has a larger number of outstanding shares compared to PepsiCo, leading to a higher total market value.

Market capitalization is a crucial metric for investors as it helps categorize companies into different size segments, such as large-cap, mid-cap, and small-cap. These classifications can influence investment strategies, risk assessments, and portfolio diversification decisions. Companies with larger market caps, like Coca-Cola and PepsiCo, are generally considered more stable investments, often referred to as “blue-chip” stocks.

In summary, while PepsiCo’s individual stock price is higher, Coca-Cola’s greater number of outstanding shares results in a higher overall market capitalization, making PepsiCo the company with the lower market cap between the two.

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