What is Market Capitalisation?

Written by Bode
Updated 3 years ago

Commonly referred to as “Market Cap.” It refers to the value of a company’s outstanding shares. Going back to our Pizza metaphor, the Market Cap. would represent the size of a Pizza pack. 

Let’s say Pizza companies can sell Pizza packs by the slice, the price of the whole Pizza pack would be the Total number of slices X price of each slice.Same goes for Market Cap., the calculation of market cap is the company’s total number of outstanding shares multiplied by the price of each share. 

As the price of the stock rises or decreases or the number of shares outstanding changes, so will the value of the market cap. 

There are three Market Cap. categories: 

  • “small-cap” ( $300M- $2B) - Companies like Cirrus Logic, Inc., Upwork, Inc. and Overstock.com.
  • “mid-cap” ($2B- $10B) - Companies like Under Armour and Shutterstock Inc
  • “large-cap” ($10B+) - Companies like Microsoft, Apple, Google, Coca - Cola
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