top of page

Market Capitalization

Updated: Apr 26

Market capitalization refers to how much a company is worth as determined by the stock market. It is defined as the total market value of all outstanding shares. To calculate a company's market cap, multiply the number of outstanding shares by the current market value of one share.


Companies are typically divided according to market capitalization: large-cap ($10 billion or more), mid-cap ($2 billion to $10 billion), and small-cap ($300 million to $2 billion).


Large-cap

Large-cap companies typically have a market capitalization of $10 billion or more. These large companies have usually been around for a long time, and they are major players in well-established industries. Investing in large-cap companies does not necessarily bring in huge returns in a short period of time, but over the long run, these companies generally reward investors with a consistent increase in share value and dividend payments.


Mid-cap

Mid-cap companies generally have a market capitalization of between $2 billion and $10 billion. Mid-cap companies are established companies that operate in an industry expected to experience rapid growth. Mid-cap companies are in the process of expanding. They carry inherently higher risk than large-cap companies because they are not as established, but they are attractive for their growth potential.


Small-cap

Companies that have a market capitalization of between $300 million to $2 billion are generally classified as small-cap companies. These small companies could be young in age and/or they could serve niche markets and new industries. These companies are considered higher risk investments due to their age, the markets they serve, and their size. Smaller companies with fewer resources are more sensitive to economic slowdowns.


Source: Investopedia, Market Capitalization: How Is It Calculated and What Does It Tell Investors?, accessed 24 December 2023, <https://www.investopedia.com/terms/m/marketcapitalization.asp>


11 views0 comments

Recent Posts

See All

Beta

Beta (β) is a measure of the volatility-or systematic risk-of a security or portfolio compared to the market as a whole (usually the S&P 500). For beta to provide any useful insight, the market that i

Earnings Surprise

An earnings surprise occurs when a company's reported quarterly or annual profits are above or below analysts' expectations. These analysts, who work for a variety of financial firms and reporting age

Earnings Per Share (EPS)

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company's profitability. It is comm

Comments


bottom of page