The mainstream media reported share market losses due to the Whitehaven hoax as being in the the vicinity of $300 million. But what does this extraordinarily large number represent and does it validly depict losses on the day?
Post-hoax, actions were described by the media as a drop in market capitalisation of $300 million. What’s not explained is market capitalisation is calculated by multiplying the share price by the total number of shares issued, to determine the market value of a company. So this $300 million “loss” was calculated by comparing the value of 100% of the shares at the lowest point on the day with the value of 100% of the shares at the highest point on the day.