Market Capitalization

Market capitalization (market cap) represents the total dollar market value of a company's outstanding shares of stock, calculated by multiplying the current share price by the total number of outstanding shares. Companies are typically categorized by market cap: mega-cap companies have valuations over $200 billion (like Apple or Microsoft), large-cap ranges from $10-200 billion, mid-cap from $2-10 billion, small-cap from $300 million to $2 billion, and micro-cap below $300 million. Market cap matters because it indicates company size and stability, affects index inclusion (the S&P 500 requires large-cap status), influences institutional investment eligibility, and helps investors compare companies regardless of their share prices.