What Is Stock Capitalization?
(2 of 6)
What Is Stock Capitalization?
"Cap" is short for capitalization, which is the market value of a stock.
Things To Know
- Capitalization is the market value of stock.
- Capitalization is usually grouped as small, medium, and large.
How to determine capitalization
Capitalization gives a picture of a stock’s size. You can calculate a stock’s capitalization by multiplying its market price by the number of its shares outstanding ("outstanding" means that it is in the hands of the public). For example, if stock A has a present value of $10 per share, and there are one million shares of it in the hands of public investors, then stock A has a capitalization of $10 million.
Categorizing stock by its capitalization
Corporate stock is often grouped by the company’s capitalization. For example, one model would group companies as follows:
- Small-cap: less than $1 billion
- Mid-cap: between $1 billion and $5 billion
- Large-cap: over $5 billion
These lower and upper limits will vary depending upon the model. However, the general classification scheme remains true.