Market Capitalization
Market cap is the total value of a company's outstanding shares: Share Price × Shares Outstanding. It categorizes companies by size.
Concept map
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Definition
Market cap is the total value of a company's outstanding shares: Share Price × Shares Outstanding. It categorizes companies by size.
Use case
Used in corporate finance workflows, analysis, and technical interviews.
Judgment check
Useful only when the assumptions and inputs behind the metric are understood.
Deep dive
How to think about Market Capitalization
Categories: Mega-cap ($200B+), Large-cap ($10B-$200B), Mid-cap ($2B-$10B), Small-cap ($300M-$2B), Micro-cap ($50M-$300M), Nano-cap (<$50M). Size historically correlates with returns — small-caps outperformed long-term but with higher volatility. Market cap-weighted indices dominate passive investing.
Example: Apple with 15.5B shares at $190/share = ~$2.95T market cap (mega-cap). A small company with 10M shares at $50 = $500M market cap (small-cap). The S&P 500 is market-cap weighted, so larger companies have disproportionate influence.