What Is Market Cap?

Market capitalization (market cap) is a company’s share price times the number of its shares outstanding: what the stock market says the whole company is worth. A company with 1 billion shares at $50 has a market cap of $50 billion.

Large, mid and small caps

Companies are grouped by size. The usual bands: large caps over about $10 billion, mid caps about $2–10 billion, small caps about $300 million–$2 billion, and micro caps below that. The exact cut-offs vary between index providers.

Large caps tend to be steadier and better researched; small caps are more volatile, less covered by analysts, and historically have had periods of both much better and much worse returns.

Why it matters

Most stock indexes, including the S&P 500 and Nasdaq 100, weight companies by market cap, so the largest companies move them most. Today the largest handful make up a big share of the S&P 500.

Market cap measures the value of the shares only. Enterprise value adds debt and subtracts cash, which is a fairer basis for comparing companies with very different balance sheets.

Put it to use

The largest US companies by market cap →Small cap stocks →

General information, not investment advice.