Market capitalization — what is market cap?
Market capitalization (market cap) is the market value of a company calculated as stock price × number of shares. Learn how to interpret it and why it's important.
Definition
Market capitalization (market cap, market capitalization) is the total market value of all issued shares of a company. It's calculated by multiplying the current price of one share by the number of all shares outstanding.
Market cap = Share price × Number of shares
Example
A company has 10,000,000 shares, each at PLN 50: Market cap = 10,000,000 × PLN 50 = PLN 500,000,000 (PLN 500 million)
Company categories by capitalization
| Category | Market cap | Examples (globally) |
|---|---|---|
| Mega cap | > $200 billion USD | Apple, Microsoft, Nvidia |
| Large cap | $10–200 billion USD | CD Projekt (Warsaw Stock Exchange), Allegro |
| Mid cap | $2–10 billion USD | Dino, CCC |
| Small cap | $300 million – $2 billion USD | Smaller companies from mWIG40 |
| Micro cap | < $300 million USD | Most companies from sWIG80 |
Why is market cap important?
- Company size assessment — market cap tells more than share price alone. A company with PLN 5 shares can be larger than a company with PLN 500 shares
- Risk — generally: the larger the market cap, the lower the risk (and lower potential return)
- Liquidity — large-cap companies have higher volume and lower spreads
- Portfolio construction — ETFs weight companies by market cap, so larger companies have bigger allocation
Market cap vs company value
Market capitalization is not the same as Enterprise Value (EV). EV also considers debt and cash, giving a more complete picture of value.
How Freenance can help?
Freenance shows market cap of companies in your portfolio, so you can see whether you're investing mainly in large, medium or small companies. This helps consciously manage risk.
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