About Market Capitalization
What is Market Cap?
Market capitalization measures a company's total value in the stock market. Calculate it by multiplying the current stock price by the total number of outstanding shares. For example, a company with 1 billion shares trading at $50 has a market cap of $50 billion.
Category Breakdown
- Mega-Cap ($200B+): Industry giants like Apple, Microsoft, and Amazon. Highly liquid with global operations.
- Large-Cap ($10B-$200B): Established leaders with proven business models. Core holdings for most portfolios.
- Mid-Cap ($2B-$10B): Growing companies transitioning from small to large. Balance of growth and stability.
- Small-Cap ($300M-$2B): Emerging businesses with higher growth potential. More volatile than larger peers.
- Micro-Cap ($50M-$300M): Early-stage or niche companies. Highest risk but potential for significant returns.
Investment Considerations
Large & Mega-Cap
- Lower volatility and steady dividends
- High analyst coverage and liquidity
- Slower growth but more predictable
Small & Micro-Cap
- Higher growth potential
- Less analyst coverage, more opportunity
- Greater volatility and liquidity risk