Market capitalization is the simplest way to measure how big a company really is — and it reveals why a $10 stock can be worth far more than a $500 one.
Market capitalization — “market cap” — is the total value of all of a company's shares. The formula is simple:
Market cap = share price × total number of shares
A company with 10 million shares trading at $50 has a market cap of $500 million. This is the figure investors use to judge a company's size, not the share price on its own.
A stock priced at $500 sounds bigger than one at $10 — but if the $500 company has only one million shares ($500M cap) and the $10 company has one billion shares ($10B cap), the “cheap” stock is the giant. Price tells you the cost of one slice; market cap tells you the size of the whole pie.
| Category | Rough range |
|---|---|
| Mega cap | $200 billion and up. |
| Large cap | About $10–200 billion. |
| Mid cap | About $2–10 billion. |
| Small cap | About $300 million–2 billion. |
| Micro cap | Below $300 million. |
Size is a rough proxy for risk and growth. Large caps are usually established, steadier and slower-growing. Small caps can grow faster but swing harder and carry more risk. Market cap is also how stock indexes are built — most weight companies by their cap, as explained in what is a stock market index.
Not advice: educational content only. For real-world fundamentals see investor.gov.
Put it together with what is a stock and what is an ETF, then trade companies of different sizes in the stock market simulator.
Market capitalization is the total value of a company's shares, found by multiplying the share price by the number of shares outstanding. It measures how big a company is.
Multiply the current share price by the total number of shares outstanding. For example, $50 per share times 10 million shares equals a $500 million market cap.
Because two companies can have the same price but very different share counts. A low-priced stock with billions of shares can be far larger than a high-priced stock with few shares.
Large-cap companies (roughly $10 billion and up) tend to be established and steadier, while small caps (roughly $300 million to $2 billion) can grow faster but are more volatile and risky.