How the market value is calculated？

Just two numbers are needed to calculate the market value of a company: the total number of shares issued by the company (including shares held by executives and insiders and anyone who owns shares) and the real-time price of that stock。Since the share prices of private companies are not known to the public, market capitalization is often used with reference to publicly traded shares。The simplicity of the market capitalization formula makes it a convenient way to quickly judge the size of different companies, but there are more subtle ways to evaluate companies。

Here are the three main market capitalization categories to keep in mind (as of June 6, 2019):

Small-cap stocks: between $300 million and $2 billion

Mid-Cap: Between $2 billion and $10 billion

Large-cap stocks: over $10 billion

While small, mid and large cap are the most traditional categories, labels are also made for extreme cases:

Micro capital: between $50 million and $300 million

Mega Capital: Over $300 billion

In general, these ranges tend to rise over time as asset prices rise。

What is the difference between market value and market value?？

Want to know how much a company can sell for?？This is its market value - the value of the company in the market.。

For public companies, one way to estimate their value is to calculate their market capitalization。

For private companies, this is a more nuanced (and subjective) calculation。Since private companies do not have publicly traded shares, it is not entirely clear what the shares are worth。

Even for public companies, estimating market value (i.e., the price other buyers are actually willing to pay) is not so easy。While market capitalization is an estimation method, many other methods can be used, including fairly rigorous accounting, taking into account the company's debt, growth prospects, taxes, etc.。These estimates sometimes include more fuzzy analysis - such as the company's innovation capabilities and macro trends in the relevant industry。

Some methods are more formula-driven and use mathematical equations to estimate value, for example, multiples allow you to take a known indicator of the company and convert it into an estimated market value。

Why Market Capitalization Matters？

For investors, market capitalization is important in two main ways.

• Market capitalization is a quick way to understand a company's size and its maturity。
• Market capitalisation gives you insight into the risks of investing: companies with smaller market capitalisations may have less mature businesses, while companies with larger market capitalisations may have more mature market positions。

Why stock splits don't affect market capitalization

A stock split occurs when a company wants to lower its stock price - so the company splits its stock into multiple smaller stocks。