New to this? Read the plain English guide first.
Share price times shares outstanding, with the size group a company falls into.
Market capitalization is the total value the stock market puts on a company. It is the simplest measure of size and it shapes risk, liquidity and how much attention a stock gets. Share price alone says nothing about size, because the number of shares varies widely between companies.
Market cap equals the current share price multiplied by the number of shares outstanding. Common size groups are nano under about $50 million, micro to about $300 million, small to about $2 billion, mid to about $10 billion, large above that and mega above about $200 billion.
A stock trades at $20 with 50 million shares outstanding. Market cap is $1 billion, which places it in the small cap group. A different company trading at $400 with 5 million shares has a market cap of $2 billion, so the cheaper looking stock is actually the smaller business.
Use market cap to set position size and expectations. Smaller companies can grow faster but swing harder and trade less easily. Pair market cap with average daily volume to check whether you could exit a position quickly.
Comparing share prices instead of market caps, ignoring debt and cash, and forgetting that market cap changes every second the market is open.
Read the full guide on market cap and compare with the enterprise value calculator. See every term in the investing glossary, try more tools in investor tools, or test yourself in Stock Jeopardy.
For education only, not investment advice. Results are estimates based on the numbers you enter.