Mar 09 2011

What is market capitalization or market cap?

Category: Finance

Answer:

Market CapMarket capitalization or market cap is measuring factor that is often used to determine the dollar value of a publicly traded company’s outstanding shares. Wall Street uses a company’s market cap to determine its relative size and its perceived value by investors. It is calculated by taking the outstanding shares and multiplying it by the market price of an individual share of stock.

Publicly traded companies are often separated into groups based on their market capitalization.

  • Mega-cap: $200 billion +
  • Large-cap: $10 billion – $200 billion
  • Mid-cap: $2 billion – $10 billion
  • Small-cap: $300 million – $2 billion
  • Micro-cap: $50 million – $300 million
  • Nano-cap: < $50 million

These definitions and classifications are approximations that will change over time and will often vary from one expert to another.


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