Finance Dictionary
Market Cap
Definition
The total value of all a company’s shares of stock.
Deep Dive
Market capitalization, or market cap, represents the total value of all of a company's outstanding shares of stock. It is calculated by multiplying the current share price by the total number of shares outstanding. This metric serves as a primary indicator of a company's size and is a fundamental consideration for investors, categorizing companies into large-cap, mid-cap, small-cap, and micro-cap segments, which often correlate with different risk and growth profiles.
Examples & Use Cases
- 1A tech giant with 5 billion shares outstanding trading at $200 per share would have a market cap of $1 trillion
- 2A newly public startup with 50 million shares trading at $10 per share would have a market cap of $500 million
- 3Monitoring a company's market cap daily to see how its valuation changes with market sentiment and stock performance.
Related Terms
Shares OutstandingStock PriceCompany ValuationPublicly Traded Company