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What is Market Cap?
Market Cap (or Market Capitalization) is the total value of a publicly traded company’s outstanding shares of stock. It's a simple way to measure a company's size and value in the stock market.
✅ Formula:
Market Cap = Share Price × Number of Outstanding SharesExample:
If a company has 10 million shares outstanding, and the current stock price is $50, its market cap is:
10,000,000 × 50 = $500,000,000
🏷️ Why It Matters:
| Category | Market Cap Range | Typical Traits |
|---|---|---|
| Large-Cap | $10 billion and above | Stable, lower risk |
| Mid-Cap | $2 billion – $10 billion | Growth potential, moderate risk |
| Small-Cap | $300 million – $2 billion | High growth, higher risk |
| Micro-Cap | $50 million – $300 million | Speculative, volatile |
| Nano-Cap | Below $50 million | Very high risk |
💡 Notes:
- Market cap does not reflect a company's debt, cash, or overall financial health.
- It’s not the same as enterprise value (EV), which includes debt and subtracts cash.
- Often used to build indexes (like the S&P 500) or screen stocks by size.
This is general information only and not financial advice. For personal guidance, please talk to a licensed professional.
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Tags:
Invest _ Learning