Define stock market capitalization
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It is a violation of law in some jurisdictions to falsely identify yourself in an email. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. The subject line of the email you send will be "Fidelity. If you're creating an investment strategy designed to help you pursue long-term financial goals, understanding the relationship between company size, return potential, and risk is crucial.
Market cap -- or market capitalization -- refers to the total value of all a company's shares of stock.
It is calculated by multiplying the price of a stock by its total number of outstanding shares. Why is market capitalization such an important concept? It allows investors to understand the relative size of one company versus another. Market cap is based on the total value of all a company's shares of stock. Float is the number of outstanding shares for trading by the general public. The free-float method of calculating market cap excludes locked-in shares, such as those held by company executives and governments.
Significant changes in the value of the shares -- either up or down -- could impact it, as could changes in the number of shares issued. As the exercise of the warrants is typically done below the market price of the shares, it could potentially impact its market cap.
But market cap typically is not altered as the result of a stock split or a dividend. After a split, the stock price will be reduced since the number of shares outstanding has increased.
For example, in a 2-for-1 split, the share price will be halved. The same applies for a dividend. If a company issues a dividend -- thus increasing the number of shares held -- its price usually drops. To build a portfolio with a proper mix of small-cap, midcap, and large-cap stocks, you'll need to evaluate your financial goals, risk tolerance, and time horizon.
A diversified portfolio that contains a variety of market caps may help reduce investment risk in any one area and support the pursuit of your long-term financial goals.
Why market cap matters. Power your stock analysis with the Equity Summary Score from Thomson Reuters StarMine. Watch this video to learn how to access the Equity Summary Score and use the data while analyzing stocks.
Equity Market Capitalization
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stock market capitalization definition | English definition dictionary | Reverso
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Why Market Cap Is More Important Than Per-Share Price
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