Market Capitalization

Market capitalization (market cap) is the total value of all a company’s outstanding shares. Multiply the current stock price by the number of shares and you get the market cap. A company with 100 million shares at $50 each has a market cap of $5 billion.

Market cap is the simplest way to gauge the size of a company. The common categories are large-cap (over $10 billion), mid-cap ($2 billion to $10 billion), and small-cap (under $2 billion). These thresholds are rough conventions, not official definitions.

Larger companies tend to be more stable and widely covered by analysts. Smaller companies tend to be more volatile and less liquid, but may have more room for growth. Comparing two stocks by price alone is misleading — a $10 stock is not necessarily smaller than a $200 stock. Market cap is what actually tells you the size.