.svg)
.svg)
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg)
.svg){kind=icon}
.svg){kind=icon}
.svg){kind=icon}
What is market capitalization?
← Back to FAQ
Market capitalization is the total market value of a company. It shows how much a company is worth according to the market, based on the current share price. It is calculated by multiplying the number of outstanding shares by the current price.
The market capitalization changes along with the share price.
When the share price rises, the market capitalization also increases. When the share price falls, the total market value of the company decreases. Market capitalization is used to classify companies into categories such as small cap, mid cap and large cap.
Large companies with a high market capitalization are often considered more stable than smaller companies, although it does not in itself indicate profitability. It mainly provides insight into the size of a publicly listed company.
Short example:
Suppose a company has 10 million shares outstanding. The current share price is €15 per share. The market capitalization is then 10 million × €15 = €150 million.
If the share price rises to €18, the market capitalization becomes 10 million × €18 = €180 million. If the share price falls to €12, the market capitalization decreases to €120 million.
Disclaimer: Investing brings risks. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. Therefore, they are for educational purposes only.
