Definition
A company's total stock market value: share price multiplied by shares outstanding. It is how companies are sized into large-cap, mid-cap, and small-cap, and it is what most index funds weight holdings by.
Why it matters
Market cap corrects the beginner instinct that a high share price means a big company: price per share is meaningless without the share count. Cap size also carries risk information, since small caps typically swing harder than large caps.
Example
A $50 stock with 2 billion shares outstanding is a $100 billion large cap. A $900 stock with 10 million shares is a $9 billion company, one-eleventh the size despite a share price 18 times higher.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.