Glossary
Market capitalization
A company's share price times its shares outstanding: what the market values the whole company's equity at.
Market capitalization, usually shortened to market cap, is the total market value of a company's shares: the stock price multiplied by the number of shares outstanding. It is the market's running estimate of what the company's equity is worth. Market cap is how companies are sorted by size, how most stock indexes are weighted, and a starting point for comparing businesses whose share prices alone say nothing about value.
How it is calculated
Market cap changes every time the price moves, and also when the share count changes through buybacks, new issuance or employee stock grants. A stock split changes the price and the share count but leaves market cap unchanged.
Variations and limits
Index providers often use float-adjusted market cap, counting only shares available to the public and leaving out large holdings by founders, governments or other companies. Companies with several share classes are measured across all of them.
Market cap values only the equity. It ignores debt and cash, so two companies with the same market cap can have very different total values. Enterprise value adds debt and subtracts cash to capture the whole business. Size labels built on market cap, such as large-cap, mid-cap and small-cap, have no official cutoffs and vary by source.