Market capitalization, or market cap, is the total value of a company's outstanding shares of stock. It's calculated by multiplying the current share price by the number of shares available.
In Depth
Market capitalization is a key indicator of a company's size and is often used by investors to understand its overall value in the stock market. Companies are generally categorized as large-cap, mid-cap, or small-cap based on their market capitalization. This metric helps investors compare companies and assess potential investment risks and opportunities. A higher market cap often suggests a more established and stable company, though it doesn't guarantee future performance.
Example
If a company has 100 million shares outstanding and each share is trading at $50, its market capitalization is $5 billion.