Fundamentals
Market Capitalization
The total market value of a company's outstanding shares, calculated as share price multiplied by total shares.
Example
A company with 100 million shares outstanding trading at $50 per share has a market capitalization of $5 billion.
Common Misconception
Market cap isn't the same as the cash a company has, or what it would cost to buy the entire company outright — that's closer to enterprise value, which also accounts for debt and cash.
Why It Matters
Market cap is how stocks get grouped into large-cap, mid-cap, and small-cap categories, which affects everything from an index fund's holdings to how volatile a stock tends to be.