Stocks 101
What Is Market Cap? Market Capitalization Explained
How market capitalization is calculated, what large-cap, mid-cap and small-cap mean, and why a high share price doesn't mean a big company.
Beginner investing lessons and fake-money practice from the maker of Quoliv.
Quick answer
Market cap is the total market value of a company's shares. You calculate it by multiplying the share price by the number of shares outstanding. A company with 10 million shares at $50 each has a market cap of $500 million. It tells you a company's size far better than its share price alone.
What you’ll learn
- Market cap = share price × shares outstanding.
- It measures how much the market values the whole company.
- A high share price doesn't mean a big company—share count matters too.
- Companies are often grouped into large-cap, mid-cap, and small-cap.
This explanation is part of our Stocks lessons path, where you can explore the idea in short lessons and quizzes.
The formula
Market capitalization = current share price × total shares outstanding.
Because the share price changes all day, market cap changes all day too. It reflects what investors are currently willing to pay, not what the company owns.
Why share price alone misleads
| Company A | Company B | |
|---|---|---|
| Share price | $500 | $20 |
| Shares outstanding | 1 million | 100 million |
| Market cap | $500 million | $2 billion |
Company B has the 'cheaper' stock but is four times bigger by market value. Always compare market caps, not prices.
Large, mid and small caps
Investors group companies by size. The exact cut-offs vary, but rough common ranges are:
- Large-cap: about $10 billion and above—often established, well-known companies.
- Mid-cap: roughly $2 billion to $10 billion—often companies still growing.
- Small-cap: roughly $250 million to $2 billion—more room to grow, usually bigger swings.
- Micro-cap and below: very small companies with higher risk and sometimes thin trading.
What market cap tells you—and what it doesn't
Smaller companies have historically tended to be more volatile than large ones, and very small stocks can be easier to manipulate. Many index funds weight companies by market cap, so the biggest companies make up the biggest slices.
Market cap doesn't tell you whether a stock is cheap or expensive, whether the company is profitable, or how much debt it carries. It's a measure of size, not quality.
Sources and methodology
This guide was written for education using the primary sources below. It does not evaluate your finances or recommend an investment. Read our editorial policy.