Market Capitalization

Definition of Market Capitalization

The total value of a company’s outstanding shares of stock, calculated by multiplying the share price by the number of shares.

Explanation of Market Capitalization

Market capitalization, often referred to as market cap, is the total value of a publicly traded company’s outstanding shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares. For example, if a company has 1 million shares outstanding and its stock price is $50, its market capitalization would be $50 million. Market cap is a key indicator of a company’s size, financial health, and overall market value. It helps investors compare the relative value of companies and assess investment opportunities. Companies are often categorized based on their market capitalization into large-cap, mid-cap, and small-cap. Market capitalization reflects investor sentiment and can be influenced by factors such as company performance, market trends, and economic conditions. By understanding market cap, investors can make more informed decisions and develop strategies that align with their investment goals.

This dictionary entry was written by

Per-Gulbrand Peter Braathen

With a foundation in doctoral-level research, Per-Gulbrand Peter Braathen is a seasoned expert in the areas of marketing, branding and communication. His proficiency extends to marketing management, branding and communication strategy. Braathen's experience is underscored by his rich background from various industries, including entertainment. A distinguished alumnus of the USC Marshall School of Business, Braathen boasts a Master of Science in Marketing, complemented by a Graduate Certificate in the Business of Entertainment from the USC School of Cinematic Arts as well as two undergraduate Bachelor degrees from the esteemed University of Southern California.