Financial Encyclopedia
Market Capitalization
Definition
Market capitalization is the total value of the company's shares outstanding on the stock market.
Example
The price of Gazprom share as of August 31, 2022 was 254.9 rubles, and the number of shares was 23,673,512,900 (Source: PJSC Gazprom official website, Shareholders and Investors).
Market cap = 23,673,512,900 * 254.9 = $6.04 trillion rub.
More detailed
The indicator is calculated according to the formula:
Market capitalization = Market price of a share * Number of shares issued
If a company issues ordinary and preferred shares, it is necessary to calculate the capitalization for each type:
Market capitalization = Market capitalization of preferred shares + Market capitalization of common shares
The share price can be viewed in the broker's application, and the number of shares can be viewed on the company's official website in the "Investors" section.
The initial market capitalization is set at the IPO. An IPO is an initial public offering on the stock market. To do this, experts evaluate the value of the company and determine how many shares and at what price will be issued.
An investor can use market capitalization to compare companies in the same industry with each other, as well as to determine the size of a company.
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