Face Value vs. Market Value of a Share

Face value, par value, market value, and book value are some of the most common terms you would come across if you deal in financial instruments like shares and bonds. It is important to understand these terms to understand things better. In this write-up, we will discuss two terms – face value and the market value.

What is the Face Value of a Share?

Face value, also known as the par value, is the value of the share printed on the share certificate. This is the value assigned by the company at the time of issuance of the share and it remains constant unless the company decides to change the price by splitting and reverse-splitting the shares.

What is the Market Value of a Share?

The market value of a share refers to the current price at which a share is trading in the stock market. This value keeps changing due to the demand and supply of the share in the market.

Relation between Face Value and Market Value of a Share

There’s no direct relation between the face value and the market value of a share. Face value is fixed by the company whereas market value is based on people’s perception of the company’s current performance and future growth potential.

In general, the face value of a share is much lower than its market value. But, in a few instances, face value can be higher than its market value. Penny stocks that trade at very low prices may have a higher face value.

Differences between Face Value and Market Value

Face Value vs. Market Value of a Share

Basis of Difference	Face Value	Market Value
Definition	Face value is the value of the share as per the share certificate.	Market value is the current value at which a share is trading in the stock market.
Fixed vs. Fluctuating	Face value is fixed at the time of issuance of a share. Its value can change only when share splits or reverse-split happens which are not frequent activities.	The market value keeps fluctuating during the market hours as per the demand and supply.
Deciding Factor	The issuing authority i.e. the issuing company decides the face value of a share.	Market value is decided by the overall market sentiment that is affected by numerous things including the performance of the company, and national and international news related to politics and the economy.