Market Capitalization Explained

Market capitalization, or "market cap," is the total value the market assigns to a company's outstanding shares, calculated by multiplying share price by the number of shares outstanding.

Market cap is often used as a quick way to categorize company size and is a very different measure from revenue or profit — a company can have a large market cap while generating relatively modest current earnings, if investors expect strong future growth.

• Large-cap companies are generally well-established with a long operating history, and tend to be less volatile than smaller companies, though this is a tendency rather than a guarantee.
• Mid-cap companies sit between large and small, often still growing but with more established operations than smaller peers.
• Small-cap companies are typically newer or more niche, and can offer higher growth potential alongside higher volatility and risk.