Market capitalization
Also called: market cap
Market capitalization is the total value of a company's shares: the share price multiplied by the number of shares outstanding.
Market cap is how investors compare company sizes. Large caps are usually over $10 billion, mid caps $2 to $10 billion, and small caps under $2 billion.
Many index funds, including the S&P 500, weight their holdings by market cap, so bigger companies make up more of the fund.
Formula
Market cap = share price × shares outstanding
Example
A company with 50 million shares at $40 has a market cap of $2 billion.
In Journey Shares
Every profile shows its market cap, and ETFs weight the people inside them by it. →
Related terms
- Share: A share is a single unit of a company's stock.
- Shares outstanding: Shares outstanding are all the shares of a company currently held by investors.
- ETF (exchange-traded fund): An ETF is a fund that holds a basket of investments, such as all the stocks in an index, and trades on an exchange like a single stock.
- Index fund: An index fund is a fund that buys every stock in a market index, such as the S&P 500, in the same proportions, so it matches the market's return instead of trying to beat it.
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