Market Capitalization
The total market value of a company's outstanding shares of stock.
Definition
Market capitalization (market cap) is the total dollar market value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of shares outstanding. Companies are typically categorized as: mega-cap ($200B+), large-cap ($10B-$200B), mid-cap ($2B-$10B), small-cap ($300M-$2B), and micro-cap (under $300M). Market cap is used to determine a company's size and is a key factor in index composition. Larger companies tend to be more stable but grow slower, while smaller companies offer higher growth potential with more risk.
Related Terms
P/E Ratio (Price-to-Earnings)
A valuation ratio comparing a company's stock price to its earnings per share.
InvestingEarnings Per Share (EPS)
A company's net profit divided by the number of outstanding shares.
MarketsStock
A share of ownership in a company that represents a claim on part of its assets and earnings.