How to Calculate Market Cap: Formula Explained

The market cap formula should be in any investor/trader's essential toolkit for evaluating companies.

By Marcel Deer

Edited by Dragan Stevanovic

Published May 21, 2024.

Bulletin board with market capitalization written on a sticky note

﻿Market capitalization is often mentioned in general overviews of stocks. It is an important metric to understand a company's size, value, and investment potential against geopolitical events. Often referred to as "market cap," it measures a company's overall value in the stock market. Market capitalization could also guide investors on how risky an investment might be and indicate its growth potential.
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What Is Market Capitalization?Market cap reflects the market's valuation of a company and can help understand the total worth of its equity to investors.
Depending on market cap value, businesses are typically described as small-, mid-, or large-cap, an important distinction used by traders interested in value investing.
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Small-capMid-capLarge-cap
Market cap$250 million - $2 billion$2 billion - $10 billion> $10 billion
Company dynamicNiche markets, emerging industries, or start-upsEstablished business models that may operate across different regions and marketsIndustry giants with global reach, such as Apple or Amazon
VolatilityHighBalancedStable

	Small-cap	Mid-cap	Large-cap
Market cap	$250 million - $2 billion	$2 billion - $10 billion	> $10 billion
Company dynamic	Niche markets, emerging industries, or start-ups	Established business models that may operate across different regions and markets	Industry giants with global reach, such as Apple or Amazon
Volatility	High	Balanced	Stable