What is Market Capitalization?
Market capitalization is the total value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares outstanding.
Market Capitalization Explained
Companies are categorized by market cap: large-cap ($10B+), mid-cap ($2-10B), small-cap ($300M-$2B), and micro-cap (below $300M). Larger caps tend to be more stable and liquid but offer less growth potential. Smaller caps can offer explosive growth but with higher volatility and risk. Diversifying across market caps is a fundamental portfolio management principle.
Real-World Example
AAPL has about 15.5 billion shares outstanding at $180 per share, giving it a market cap of approximately $2.8 trillion — making it one of the largest companies in the world. A small-cap stock with 10 million shares at $50 has a $500 million market cap.
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