Market cap.
In plain English
Market cap (short for market capitalization) is a company's current stock price multiplied by its total shares outstanding. It is the market's running estimate of the company's total equity value. Market cap changes every second the market is open. It is the most common way investors size up a company and the basis for how the S&P 500 weights its constituents.
01Why it matters
Market cap, not stock price, is what tells you how big a company is. A $5 stock with 10 billion shares is bigger than a $500 stock with 50 million shares. Index funds weight by market cap, so a few of the largest companies usually account for an outsized share of broad-market returns.
02The math, step by step
Apple has roughly 15 billion shares outstanding. At a $230 stock price, its market cap is about $3.5 trillion. A small-cap company at $25 a share with 100 million shares has a market cap of $2.5 billion. Same neighborhood of share price; companies that differ by a factor of 1,400 in actual size.
03What this is NOT
Stock price alone tells you nothing about company size. A $5 stock can be a giant; a $500 stock can be smaller than people assume. Multiply by shares outstanding to get the right number.