market capitalization

Definition

MCAP or market cap. Market capitalization represents the aggregate value of a company or stock. It is obtained by multiplying the number of shares outstanding by their current price per share. For example, if XYZ company has 15,000,000 shares outstanding and a share price of $20 per share then the market capitalization is 15,000,000 x $20 = $300,000,000. Generally, the U.S. market recognizes three market cap divisions: large cap (usually $5 billion and above), mid cap (usually $1 billion to $5 billion), and small cap (usually less than $1 billion), although the cutoffs between the categories are not precise or fixed.
In our example above, XYZ would be considered a small cap company. Also called market cap.

Use this term in a sentence

I did not want to know about market capitalization because I knew it would say that we had no value at all.

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You need to do your best to figure out how market capitalization works and how it can help your company grow.

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I originally thought the share price of my company's stock was expensive, but when I multiplied the price by the number of shares outstanding, I saw that the company's market capitalization was low.

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