Market capitalization, often referred to as “market cap,” is a measure used to evaluate the total value of a publicly traded company. It is calculated by multiplying the current market price of a company’s outstanding shares by the total number of outstanding shares.
Market capitalization reflects the market’s collective valuation of a company and is an important metric for investors, analysts, and companies themselves.
Market capitalization is typically categorized into three main groups:
- Large-cap: Companies with a market capitalization greater than $10 billion.
- Mid-cap: Companies with a market capitalization between $2 billion and $10 billion.
- Small-cap: Companies with a market capitalization below $2 billion.
Market capitalization is a dynamic metric that fluctuates with changes in a company’s stock price and the number of outstanding shares. It provides insights into a company’s relative size within the market and is often used for comparing companies within the same industry or sector.
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