Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. Commonly referred to as “market cap,” it is calculated by multiplying a company’s shares outstanding by the current market price of one share. This metric is used to determine the relative size of a company in the marketplace. Market capitalization categories include: large-cap ($10 billion or more), mid-cap ($2 billion to $10 billion), and small-cap ($300 million to $2 billion). Understanding market cap helps investors assess the risk and return profile of an investment and compare company sizes.
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Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
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