What is market capitalization?

Market capitalization (or Market Cap) is simply the total value all of single company's shares of stock. It shows the actual market value and size of the company. Calculating it is quite easy; simply multiply the share price with the number of shares the stock has. The number you get is the Market Cap.

We can make a distinction between large-cap, mid-cap and small-cap companies depending on their Market Cap.

  • Large-cap companies are companies with a market value of over $10 billion. They are well-established, have a good history of producing quality goods, they usually pay dividends etc. These companies are most likely industry leaders.
  • Mid-cap companies have market value ranging between $2 billion and $10 billion. These companies have established reputation within the industry, and are expected to be the “growers”.
  • Small-cap companies are companies with $300 million to $2 billion market value. Small-cap companies are usually new and volatile. They take more risks in order to rapidly prosper.