Market Capitalization Calculator
Total Market Capitalization
What is Market Capitalization?
Market Capitalization, commonly referred to as "market cap," represents the total dollar market value of a company's outstanding shares of stock. It is a primary metric used by investors to determine a company's size and total value in the eyes of the public market, rather than looking at sales or total asset figures.
How to Calculate Market Cap
The calculation for market cap is straightforward. It is the product of the current share price and the total number of shares held by all shareholders, including institutional investors and company insiders.
Formula: Market Cap = Current Stock Price × Total Shares Outstanding
If "Company A" has a current stock price of $50.00 and there are 1,000,000 shares outstanding, the market cap is:
$50.00 × 1,000,000 = $50,000,000 (Small Cap)
Understanding Market Cap Categories
Investors typically categorize companies based on their market cap to assess risk and growth potential:
- Mega-Cap: $200 billion or more. These are industry leaders (e.g., Apple, Microsoft).
- Large-Cap: $10 billion – $200 billion. Established companies with stable returns.
- Mid-Cap: $2 billion – $10 billion. Companies in an expansion phase with moderate risk.
- Small-Cap: $300 million – $2 billion. Younger companies with high growth potential but higher volatility.
- Micro-Cap: Below $300 million. Very high risk, often penny stocks.
Why Market Cap Matters
Market cap is more important than stock price alone. A stock trading at $100 might actually belong to a smaller company than a stock trading at $10, depending on how many shares exist. Market cap helps you understand the investment's risk profile and allows for better portfolio diversification.