Definition of Market Cap
What is a Market Cap?
Note: Also known as "market capitalization". Most publications, TV shows and investors will use the shorter "market cap" term.
Market cap is the total dollar value of a company, or the "size" of a company.
To arrive at a company's market cap, you multiply the total number of shares outstanding by the current price of one share.
Let's take a look at a few examples:
Example 1. Microsoft.
Microsoft is currently trading at $19.03 per share.
There are currently 8.98 billion shares outstanding in Microsoft (this includes restricted shares, everything).
Pull out your trusty calculator at punch in 19.03 x 8,980,000,000 and you will arrive at:
$171 billion, which is the current market cap of Microsoft (the 8.98 billion share number is not 100% exact, but you get the idea).
Example 2. Google.
Google is currently trading at $311.22 per share, and they have approximately 315 million shares outstanding in the company.
Multiply $311.22 x 315 million, and you are left with $97.86 billion dollars (approximately), which is the current "size" of Google.
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