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Market Capitalization — Market Capitalization
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Market Capitalization

Market Capitalization

Of the entire universe of investable stocks, companies are divided into subgroups based on their market capitalization, or market cap for short. Market capitalization is a measure of the size and value of a company. It’s calculated by multiplying the price of a single share of a company by the total number of the company’s outstanding shares.

Based on this value, the companies are then classified into 3 subgroups: large caps, mid caps, and small caps.

Tap Next to explore each of these groups in more detail.


Market capitalization best indicates which of the following measurements of a company?

0/23 (0%) Correct
  • 1
    Profit and Size
  • 2
    Value and Size
  • 3
    Value and Profit
  • 4
    Revenue and Profit
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Alex's thoughts: 
A lot of CEO's of public companies like to brag about their Market Cap. The company with the largest market cap in the world is currently Apple with a $460 Billion Market Cap.

Here is where I like to think, in order for me to lose 10% on my investment, a company like Apple must lose $46 Billion in value (If its Market Cap is $460 Billion) That makes me feel a little extra warm and fuzzy inside when I invest in large cap stocks.

Mid cap segment is less risky than small caps but there are still decent returns to be found and there are a lot of growth companies in this segment.

I rarely invest in small cap if I don't have a 100% grasp on the company's  business and their market's future. This segment is nothing for newbies due to the illiquid state of a lot these stocks.