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What Is Market Capitalization?
March 30, 2026 · 1 min read
Market capitalization (market cap) is the total market value of a company's outstanding shares. It is calculated by multiplying the current share price by the total number of shares.
The Formula
Market Cap = Share Price × Total Shares Outstanding
Size Categories
- Large-cap: Over $10 billion. These are typically well-established companies with stable revenues. Examples include household-name technology and consumer companies.
- Mid-cap: $2–10 billion. Often companies in a growth phase — larger than startups but still expanding.
- Small-cap: Under $2 billion. Usually younger or niche companies with higher growth potential but also higher risk.
Why Market Cap Matters
Market cap gives a quick sense of a company's size and relative risk profile. Larger companies tend to be more stable but may grow more slowly. Smaller companies may grow faster but are generally more volatile.
Not the Same as Company Value
Market cap reflects what the market is willing to pay, which can change with sentiment, news, and macroeconomic conditions. It doesn't account for the company's debts or assets — that's what enterprise value measures.