How to Calculate Market Capitalization
Market capitalization equals the share price times the number of shares outstanding, which is what the market says a company's equity is worth.
The Market Capitalization formula
Calculator
Enter the share price and the share count to get market cap, its size bucket, and what a price move does to it.
The latest traded price of one share.
Shares the company has issued and investors hold, taken from its financial filings.
Same share count, different price. This is what moves market cap day to day.
Price times share count values the whole equity at $12,000,000,000.
- Market cap in billions
- $12 billion
- Size bucket
- Large cap
- Market cap at the second price
- $15,000,000,000
- Change in market value
- $3,000,000,000
- Percent change in market cap
- 25%
Billions is the unit companies of this size are normally compared in.
Investor convention, not an official definition, so the cutoffs shift from one source to another.
At the second price the same shares are worth $15,000,000,000.
$3,000,000,000 of market value is added by the price move alone, with no shares issued or bought back.
Market cap moves 25%, exactly the percent change in the share price, because the share count never entered the comparison.
How to calculate Market Capitalization, step by step
- 1Take the current share price. Use the latest traded price, since market cap moves the moment the price does.
- 2Find shares outstanding. The number of shares the company has issued and that investors hold, reported in its financial filings.
- 3Multiply the two. Market cap = share price × shares outstanding. Keep the units straight, because a price in dollars times a share count in millions gives an answer in millions of dollars.
- 4Restate it in billions. Divide by one billion so the figure can be compared with other companies at a glance.
- 5Read the size bucket. Investors sort companies into large, mid, small, and micro cap ranges by that dollar figure, using cutoffs that vary from one source to another.
Worked example: Market Capitalization
A company's shares trade at $48 and it has 250 million shares outstanding. Market cap = 48 × 250,000,000 = $12,000,000,000, or $12 billion, which sits in the large cap range. If the price rises to $60 while the share count is unchanged, market cap = 60 × 250,000,000 = $15,000,000,000. The company gained $3,000,000,000 of market value, a rise of 25%, matching the 25% rise in the share price exactly.
Market Capitalization questions
Is market capitalization the same as what a company is worth?
Not quite. Market cap prices the equity only. Buying the whole business also means taking on its debt and collecting its cash, which is why acquirers look at enterprise value: market cap plus debt minus cash.
Why does market cap change every day?
The share count moves slowly, while the price moves with every trade, so nearly all of the daily change is price. That is why the percent change in market cap matches the percent change in the share price.
What counts as a large cap company?
A common convention puts large cap above $10 billion, mid cap between $2 billion and $10 billion, small cap between $300 million and $2 billion, and micro cap below that. These are market habits rather than official definitions, so the cutoffs differ between sources.
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