Market Capitalization (Market Cap)

Market capitalization (or market cap) is the total dollar value of a company's stock. You calculate it by multiplying the stock price by the number of shares outstanding—basically, what the market thinks the entire company is worth right now. You'll see market cap everywhere when researching stocks because it's a quick way to size up companies. A larger market cap generally means a more established, stable company, while smaller caps tend to be riskier but have more growth potential. For example, if TechCorp's stock trades at $50 and has 100 million shares out there, its market cap is $5 billion. Market cap helps you compare companies fairly, since stock price alone can be misleading.