Market capitalization

What is Market capitalization?

Market capitalization is the value of all tradable ordinary shares of the company. It’s used to estimate the size of a company and show how much the company is worth.

It is important to note that when calculating market capitalization, non-traded shares and treasury shares are not taken into account.

What does Market capitalization mean?

Investors use Market capitalization as an indicator of company size. The size of a company can influence how investors view a company, its risk, and how it compares to other companies.

Companies with a capitalization of more than $10 billion are called large-cap companies. Investing in such companies is often attractive to all investors because of their size and liquidity. Large-cap companies are also considered to be mature companies with more established businesses.

Companies with a capitalization of $2 billion to $10 billion are called mid-cap companies. Mid-cap companies are preferred by investors who are looking for growth opportunities or less mature companies. However, investments in such companies can be risky, as mid-cap companies are sometimes as small as they are for a reason and growth is a challenge.

Companies with a capitalization of $300 million to $2 billion are called small-cap companies, and are usually more volatile, risky, and less liquid than mid-cap and large-cap companies. Small-cap companies are also more affected by investor preference. Many investors do not want to bet on companies that are small.

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