Market Capitalization

What is Market Cap?

Market Cap is the total value of all a company's shares. It's calculated by multiplying share price by number of shares. It shows how big the company is.

Think of it like this

Imagine a pizza cut into 8 slices (shares). Each slice costs $5 (share price). The whole pizza is worth $40 (market cap). Bigger pizzas (companies) are worth more!

Formula

Market Cap = Share Price × Shares Outstanding

Why it matters

  • Shows company size
  • Determines what index it's in (S&P 500, etc.)
  • Affects risk and volatility
  • Helps categorize investment type

Real-world example

Apple: $3T - mega cap, very stable. Rivian: $15B - mid cap, more volatile. Local company: $500M - small cap, highest risk/reward.

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This is educational content, not financial advice.