What Is Small-Cap Stock?
A company with a market capitalization typically between $300 million and $2 billion.
The Full Definition
Small-cap stocks are companies with a relatively small market capitalization — generally in the $300 million to $2 billion range, though exact thresholds vary by index provider. They tend to be earlier in their growth cycle than large-caps, with greater potential upside but also more volatility, less analyst coverage, and thinner trading liquidity. Small-caps have historically delivered a modest long-term return premium over large-caps, a pattern researchers call the "size factor" — but that premium comes with meaningfully larger swings along the way.
Real-World Example
A regional bank or a niche industrial supplier with a $1 billion market cap is a small-cap stock — easy to overlook next to a $3 trillion mega-cap, but capable of growing into a mid-cap or large-cap over time if the business executes well.