Market capitalization, or market cap, is the total value of all a company’s shares. Multiply the share price by the number of shares.
Why it matters
It tells you how big a company is in the eyes of the market. A share price alone does not, because companies have different numbers of shares.
Large, mid and small
People often call the biggest companies large cap, the middle group mid cap and the smaller ones small cap. Smaller companies can grow fast, but they can also swing more and be harder to trade.
A quick example
Say a company has 10 million shares and each share trades at $20. Its market cap is $200 million. Now say another company has 100 million shares at $5. Its market cap is $500 million. The second company has the lower share price, but it is the larger company. That is why market cap is a better size check than price.
The size groups
There is no official rulebook, but many investors use rough ranges. Mega and large caps are the biggest, often worth tens or hundreds of billions. Mid caps sit in the middle. Small caps are smaller, and micro caps are smaller still. Smaller companies often have fewer analysts covering them and fewer shares changing hands each day.
What market cap does not tell you
Market cap is not the same as what a company earns, owns or owes. Two companies can have the same market cap and very different debt, sales and profits. Treat it as one number in a bigger picture, not a verdict.
How it changes
Market cap moves every time the share price moves. It also moves when a company issues new shares or buys shares back. If you see a company’s size jump or drop, check whether the price changed, the share count changed, or both.
Questions to ask
How big is this company compared with others in its field? How easy is it to buy and sell its shares on a typical day? Does the size match the story the company tells about itself? Asking these builds a habit that helps long after you forget a single definition.
Try it
Browse company pages to see size and sector side by side.
Explore: Browse company pages.
Common questions
Is market cap the same as company value?
It is the market price of all shares. It is not the same as what the company earns, owns or owes.
What are small cap, mid cap and large cap?
Rough size groups based on market cap. Different sources use different cutoffs.
Why does market cap change daily?
Because the share price moves, and market cap is price times shares.
Keep reading
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- 10 Trading Habits That Protect Your Money
- How to Spot a Red Flag Before You Invest
Education only. This is not investment advice, and investing involves risk, including loss of money.