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Market capitalization simply explained

Written by Oscar Leistikow | Aug 19, 2021

Table of contents

  1. What is market capitalization?
  2. How is market capitalization calculated?
  3. What does market capitalization tell us?

What is market capitalization?

Market capitalization is a common indicator used to roughly classify the size of a company and compare it with other companies. A distinction is made between large, mid and small caps (“cap” is the abbreviation for capitalization). The distinction is usually made on the basis of market capitalization: large caps > € 5 billion, mid caps > € 2 billion, small caps < € 2 billion.

Market capitalization is also referred to as the market capitalization of a company.

The most important facts in brief

  • Common key figure for assessing the size of a company
  • A distinction is made between large, mid and small caps
  • Market capitalization is not the company value

How is market capitalization calculated?

Market capitalization is calculated by multiplying the share price by the number of shares issued.

Calculating market capitalization:

The calculation of Tesla 's market capitalization as of September 13, 2024 is shown as an illustration:

What does the market capitalization tell us?

Market capitalization reflects the value that shareholders would be willing to pay for a company's equity. Market capitalization can fluctuate greatly depending on the volatility (price fluctuations) of the individual share and changes daily.

Please note: Market capitalization does not represent the value that would have to be paid to buy the entire company, as a company's debt and liquid assets, for example, are not taken into account in market capitalization. The “Enterprise Value” represents this adjusted company value

Table of the world's largest companies by market capitalization

This table shows the companies with the highest revenue growth of the S&P 500. For a daily updated table, click here!

Updated on: Wed, Aug 07 2024
Stock Market Capitalization
Apple  $3.19t
Microsoft  $2.96t
NVIDIA  $2.43t
Alphabet  $1.98t
Saudi Aramco $1.73t
Amazon.com  $1.71t
Meta Platforms (Facebook)  $1.24t
Berkshire Hathaway $920.31b
Taiwan Semiconductor Manufacturing Co.  $804.15b
Eli Lilly and Company $733.85b