What is market cap?

Market cap is an investment term used to describe the market value of a publicly-traded stock’s outstanding shares. In other words, the market cap is essentially how much it would cost to purchase every share of a company at its current price.

What is a mid-cap stock?

Mid-cap stocks generally fall between large caps and small caps on the risk/return spectrum. Mid-caps may offer more growth potential than large caps, and possibly less risk than small caps. Small-cap companies are typically those with a market value of $300 million to $2 billion.

What is the difference between small-cap and large-cap companies?

While small-cap companies have a market cap of less than $2 billion. Though market cap is a useful metric, it should not be the only factor to consider when making investment decisions. A company with a large market cap may be overvalued by the market, while a small-cap company may be undervalued.

How do you calculate market cap?

To calculate market cap, you take the total number of a company's shares outstanding and multiply that figure by the company's current stock price. For example, if a company has 5 million shares outstanding and its current stock price is $20, it has a market capitalization of $100 million.