Face Value

Face value is the nominal amount stated on a bond or share. On a bond it is the principal repaid at maturity; on a share it is a reference amount set when the company was founded.

For bonds it matters in practice. The coupon is calculated on face value, and face value is what you receive at maturity — however cheaply you bought it in the market.

For shares it means almost nothing. A share with a face value of 5 routinely trades at 500. The company's actual worth bears no relation to the figure.

Share face value mainly appears in stock splits. Splitting a face value of 5,000 into 500 multiplies the share count tenfold and divides the price by ten. The company is unchanged, but each share looks cheaper and trading picks up.

So face value is a working number for bonds and largely a formality for shares. That is why you cannot judge whether a stock is expensive from its face value.