In recent news we saw Apple (APPL) passed the $800 billion mark in market capitalization. Based on that metric, that makes it the most valuable company in the world. But what is market capitalization, more commonly known as market cap? It is a method of valuing a company calculated by multiplying the number of shares a company has outstanding by the price of one share for that company’s stock. There are several different types of market caps, however.
Companies listed under mega cap have a market capitalization greater than $200 billion. Apple falls under this category as well as Exxon Mobile (XOM) and Microsoft (MSFT).
Large cap companies have a market capitalization between $10 billion to $200 billion. Home Depot (HD), Verizon (VZ) and Coca-Cola (KO) are all large cap companies.
A mid cap company has a market capitalization between $2 billion to $10 billion. Bed, Bath, and Beyond (BBBY), and Buffalo Wild Wings (BWLD) are mid cap companies.
A small cap company has a market capitalization between $300 million to $2 billion. Fossil Group (FOSL) and Bankrate (RATE) are examples of small cap companies.
A Micro-cap company has a market capitalization below $300 million. Examples of a micro cap companies are Heat Biologics (HTBX) and GSI Technology (GSI).
The market capitalization for a company can say a lot about what kind of company it is. Stocks in the mega cap and large cap classification are also called “blue chip stocks” and are known for their consistency and their dividends payments. On the flip side, companies in the micro cap and small cap class are known for their growth potential, but are also more risky. A mid cap stock combines the two; more stable than a small cap stock, and more growth potential than a large cap.
Each security comes with risk, and the companies listed should not be taken as an endorsement or a recommendation. Please consult with a financial, investment, and/or tax adviser before investing.