Series 79: Market Capitalization

Market Capitalization

As we explained in the valuation discussion, a corporation’s market capitalization, or market cap, is its per-share market price multiplied by its total outstanding shares. The term “market capitalization” is sometimes used to refer to the total market capitalization of all stocks traded on a specific exchange or in a particular industry.

Market capitalization is most often used as a metric for grouping companies together based on size. There is no universal agreement on the precise boundaries for the various market cap categories, but the following classifications are widely used:

• • A mega cap company has a market capitalization of more than $200 billion. Some analysts use $100 billion as the minimum market cap, while others only consider a company mega cap if its market cap is at least $250 billion. In any case, only a