Market Capitalization, What is it?

Market capitalization (market value) is a company's total value on the exchange, computed as share price × number of shares outstanding. If a stock trades at 10 with one billion shares, its market cap is 10 billion. It is used to classify companies as large-, mid-, or small-cap, large caps are usually more stable and liquid, small caps more volatile with more upside. It is important to separate market cap from share price: a company with a high share price is not necessarily "bigger" than one with a lower price, because share count matters too. Market cap also drives index weights.