Market Cap

How market capitalization is calculated, what mega, large, mid and small cap mean, and why company size affects how a stock behaves.

What market cap measures

Market capitalization, or market cap, is the total value the stock market places on a company. It is calculated by multiplying the share price by the number of shares outstanding. A company with 500 million shares trading at $40 has a market cap of $20 billion.

Share price alone tells you nothing about size. A $500 stock can be a smaller company than a $50 stock if it has far fewer shares. Market cap is the number that lets you compare companies fairly.

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