What Is Market Capitalization?
The total market value of all a company's outstanding shares.
The Full Definition
Market capitalization — market cap — is calculated by multiplying a company's share price by its total number of outstanding shares. It represents what the market currently believes the entire company is worth. Companies are typically categorized as large-cap (over $10 billion), mid-cap ($2–10 billion), and small-cap (under $2 billion). Market cap is one of the most useful quick measures for understanding a company's size, risk profile, and role in a portfolio.
Real-World Example
If a company has 1 billion shares outstanding and the stock trades at $150, the market cap is $150 billion — making it a large-cap stock. Apple's market cap has exceeded $3 trillion, making it one of the largest companies ever.