Market Capitalization (Market Cap)

The total market value of a company's outstanding shares.

What Is Market Capitalization (Market Cap)?

Market cap is calculated by multiplying the stock price by the total number of shares outstanding. It classifies companies into size tiers: mega-cap ($200B+), large-cap ($10B-200B), mid-cap ($2B-10B), and small-cap (under $2B).

Formula

Market Cap = Share Price × Total Shares Outstanding

Why It Matters

Market cap determines a company's weight in indexes, affects liquidity, and correlates with risk. Larger companies tend to be more stable but grow slower. Smaller companies are riskier but have more room to grow.

Related Terms

Enterprise Value (EV)

See This Metric in Action

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