What is market cap?

Market capitalisation: The share price times the number of shares. It is what the market currently thinks the whole company is worth.

Market capitalisation, or market cap, is what the market is willing to pay for the whole company right now. You multiply the share price by the total number of shares.

Market cap lets you compare companies by size. An expensive share does not always belong to a big company, because the number of shares differs per company.

Indexes often use market cap to decide how much weight a company gets. Companies with a small market cap tend to move up and down more sharply.

Example
A company has 40 million shares and the share price is 25 euros. The market cap is 40 million times 25 euros, which is 1 billion euros. If the price rises to 30 euros, the market cap becomes 1.2 billion euros.

Watch out
Market cap says nothing about debt or about the real value of what the company owns. It is a snapshot that changes every day.

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