Market Capitalization (Cap) Definition
If you’re new to the stock market, you’ve likely been overwhelmed with all the stock market terms that investors use. In this article, we’re going to discuss what is market capitalization or market cap in stocks.
Dy definition, market capitalization is the value of a company that is traded on the stock market. Simply put, Market cap, or market capitalization, is a measure of the value of a publicly traded company’s shares.
How To Understand Market Capitalization (Cap)
In order to understand market cap, it is important to first understand what the stock market is. The stock market is a collection of all the stocks that are being traded on the stock exchange. The stock exchange is where companies list their stocks and investors can buy and sell them.
Understanding market cap is important for understanding the overall value of a company. It also helps us compare companies within the same industry. It can also be useful for understanding the risk involved in investing in a particular company. A high market cap indicates that a company is large and stable. On the other side, a low market cap indicates that a company is small and riskier. Knowing the market cap can help you make informed investment decisions.
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How To Calculate Market Capitalization (Cap)
Now we know now that the market cap is a measure of the value of a publicly traded company’s shares. Market cap is calculated by multiplying the number of shares outstanding by the current market price per share. For example, if a company has 1 million shares outstanding with a share price of $20, the market cap would be $20 million.
Additionally, the market cap is often used to categorize companies by size. Specifically, large-cap companies have a market cap of $10 billion or more. While small-cap companies have a market cap of less than $2 billion.
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Bottom Line
Though market cap is a useful metric, it should not be the only factor to consider when making investment decisions. A company with a large market cap may be overvalued by the market, while a small-cap company may be undervalued.
In addition, the market cap does not take into account other important factors. This includes the company’s financial health, competitive advantage, and growth potential to name a few. As such, it is important to consider all available information when making investment decisions.
Below you will find a list of the 10 largest publicly traded companies in order by market cap. The current share price is as of Friday, August 12, 2022 afternoon.
- Apple, Inc. (NASDAQ: AAPL)
- Market Cap: $2.762 Trillion
- Current Share Price: $171.90
- Microsoft Corporation (NASDAQ: MSFT)
- Market Cap: $2.169 Trillion
- Current Share Price: $290.95
- Alphabet (NASDAQ: GOOG)
- Market Cap: $1.591 Trillion
- Current Share Price: $122.48
- Amazon.com, Inc. (NASDAQ: AMZN)
- Market Cap: $1.455 Trillion
- Current Share Price: $142.84
- Tesla, Inc. (NASDAQ: TSLA)
- Market Cap: $938.51 Billion
- Current Share Price: $898.54
- Berkshire Hathaway (NYSE: BRK.B)
- Market Cap: $661.45 Billion
- Current Share Price: $300.34
- UnitedHealth Group, Inc. (NYSE: UNH)
- Market Cap: $506.05 Billion
- Current Share Price: $541.01
- Meta Platforms Inc. (NASDAQ: META)
- Market Cap: $484.45 Billion
- Current Share Price: $180.26
- Taiwan Semiconductor Manufacturing Co. Ltd (NYSE: TSM)
- Market Cap: $472.06 Billion
- Current Share Price: $91.03
- NVIDIA Corporation (NASDAQ: NVDA)
- Market Cap: $464.23 Billion
- Current Share Price: $186.29
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