Market cap
Total market value of the company.
Market capitalization (market cap) is the total value the market assigns to a listed company at a given moment. It's price per share times shares outstanding. It's the simplest way to say 'how much a company is worth' according to Wall Street, the London Stock Exchange, or any other reference market.
Market cap is not the same as the theoretical takeover price: to acquire the whole company you'd also need to absorb net debt, usually with a control premium. That's what enterprise value (EV) captures. But for quick cross-company comparisons, and for classifying companies into size segments (large/mid/small cap), market cap is the standard.
Worked example
Apple (AAPL), as of May 17, 2026, trades near $300 with about 15 billion shares outstanding. Market cap = 300 × 15,000,000,000 = $4.5 trillion.
For scale: the entire FTSE MIB (Italy's 40 largest listed companies) totals about €600 billion in market cap. Apple alone is therefore worth more than seven times the entire Italian stock market combined. Numbers like that help calibrate the global scale of equity markets and explain why capital flows behave the way they do.
When it's used
Market cap serves three main purposes: classify companies by size (mega cap >$200B, large cap $10-200B, mid cap $2-10B, small cap $300M-2B, micro cap <$300M); weight market indexes (the S&P 500 and FTSE MIB are market-cap weighted — larger companies count more); compute alternative valuation multiples (Price/Sales, EV/EBITDA when starting from enterprise value).
Limits
Market cap reflects equity value only — it ignores debt. Two companies with similar market cap can have radically different capital structures, one with $50 billion in net cash, the other with $30 billion in net debt. For M&A, leveraged buyouts, or rigorous sector comparisons, enterprise value (EV = Market cap + Debt − Cash) is the preferred metric.
Frequently asked
Does higher market cap mean a better company?
No. It just means 'bigger in the market's eyes'. Historically small caps have delivered higher returns than large caps over long horizons, with higher volatility.
Why does market cap change every second?
Because share price changes every second during market hours. Shares outstanding rarely change (buybacks, new issuance happen periodically), so intraday moves come almost entirely from price.
What's the difference between market cap and enterprise value?
Market cap = equity value only (shares). Enterprise value = market cap + debt − cash. EV better represents the cost of acquiring the whole company.
Related terms
Educational definition. Not financial advice.