Market Capitalization

Market capitalization means the total market value of a company’s shares. In simple terms, market capitalization shows how much the stock market says a company is worth. Market capitalization is important because investors use it to compare company size and classify stocks as small-cap, mid-cap, large-cap, or mega-cap. It is calculated by multiplying the stock price by shares outstanding. For example, if a company has 1 billion shares outstanding and each share trades at $100, its market capitalization is $100 billion. Market capitalization is not the same as revenue or profit. It is the market value of the company’s equity, not the money the company earns.