Stock market basics
Market capitalization (market cap)
Definition
Share price × shares outstanding: the market value of all of a company’s shares.
Example
Say company A trades at $300 with 10 million shares outstanding, while company B trades at $25 with 600 million shares. A’s market cap is $3 billion and B’s is $15 billion, so the cheaper share belongs to the company the market values five times higher. A share price on its own says nothing about a company’s size.
Hypothetical numbers, for illustration only.
Also defined in
- Trading Glossary: Stock Trading Terms Explained→ Market terms: stocks, rates, forex and futures
- Fundamental Analysis for Beginners: How to Analyze a Company’s Numbers→ What is fundamental analysis, and how is it different from technical analysis?
- P/E Ratio Explained: How to Use the Price-to-Earnings Ratio→ How to calculate the P/E ratio
UpTickFlow is our product. These guides are education, not financial advice. Trading involves a substantial risk of loss.