Market Capitalization

RECENT NEWS
The Economic Times  Dec 14  Comment 
The gap between large-cap and mid-cap valuations is the widest in at least five years and it has consistently increased over the past five years.
MarketWatch  Dec 11  Comment 
During one hour in post-IPO debut, LendingClub's market cap jumps $430 million
The Economic Times  Dec 10  Comment 
'Mid caps will continue to do better than large caps, and sectorally we believe that it is probably the public sector banks which will drive the market in this period.'
The Economic Times  Dec 3  Comment 
Overall, it's not been an extraordinary day for the large caps.You have to look in the broader markets to find some action.
The Economic Times  Nov 28  Comment 
The BSE ranks at 10th position globally with a market cap of over $1.6 trillion, crossing Rs 100-trillion mark in the rupee terms for the first time ever.
The Economic Times  Nov 19  Comment 
India’s market capitalisation has risen 41% so far this year, highest among all countries, on the back of Rs 93,000-crore investments by FIIs.
The Economic Times  Nov 3  Comment 
The first level in the downside will be around 8250, possibly 8180. I do not see the index falling much below 8180 or breaking that.




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Market Capitalization equals the price per share of a company times the number of shares outstanding

Market Capitalization, often shortened as "Market Cap", is the total market value of a company's outstanding shares. Market capitalization is calculated by multiplying the number of shares outstanding (this includes the value of all listed categories of a corporation's stocks - preferred stock, common shares, etc) by the market price per share which is the current value of a company. For example, if a company has 10 million shares, and the current price per share is $10, then the company's market capitalization is (10 million shares x $10), or $100 million.

Market cap is the public market's gauge of how much a company is worth.

Classification of Market Cap

  • Small cap companies with a market cap under $1B (under $2B in some classifications)
  • Mid cap companies with a market cap between $1-5B ($2B to $10B in some classifications)
  • Large cap companies with a market cap over $5B (over $10B in some classifications)

You may also see reference to "Mega cap" ($200B or more), "Micro cap" ($50M to $300M) and even "Nano cap" (under $50M).

Examples of Mega cap include companies like Exxon Mobil and Apple (AAPL).

Examples of Large cap include companies like Google.

Market Cap Classes and Risk

For investors it is important to have some knowledge of how different classes behave. In general, the larger the market cap the greater the stability and the lower the risk. In general, large caps are mature companies and small caps are younger, growing companies. Small caps carry greater risk, but also more upside potential than large caps.

Some mutual funds focus on specific market cap classes and some strive for a mix of different classes.

Other Uses of Market Cap

The market capitalization or size of an industry, or entire stock exchange or entire nations may be calculated.

By the end of 2007 the market cap of the NY Stock Exchange was $15.65 trillion. Including the American SE and NASDAQ the total market cap for the US was $19.92T. The market cap for the entire world was just more than $55T at that time.

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