Market Cap | by Wall Street Survivor

Market Capitalization Explained

The video from Wall Street Survivor explains market capitalization (market cap) as the total value of a company’s outstanding shares. It is calculated by multiplying the number of shares outstanding by the current market price per share. Market cap reflects the public’s perceived value of a company.

Key Finance Points

• Formula: Market Cap = Outstanding Shares × Current Market Price

• Example: Lucy’s Diner has 100,000 shares outstanding and trades at $50 per share, so its market cap is: 100,000 × $50 = $5 million

Market Cap Categories

• Small Cap: Less than $2 billion
• Mid Cap: $2 billion to $10 billion
• Large Cap: Greater than $10 billion

Use Cases of Market Cap

Market capitalization is essential for comparing companies of similar size, whether for qualitative or quantitative analysis, including technical or fundamental approaches. Investors should compare companies within the same market cap category to make meaningful assessments.

Examples of Large Cap Companies

• Exxon Mobil was the most valuable company for much of the 2000s.
• Recently, Apple has overtaken Exxon Mobil as the most valuable company.

Note: No specific investment recommendations or cautions were provided. No tickers or ETFs were explicitly mentioned aside from company names (Exxon Mobil, Apple).

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Source: Wall Street Survivor (presenter not named)