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Market Cap

Updated on March 9, 2023

Market cap or ‘Market capitalization’ or MCap refers to the market value of a company’s outstanding shares. It is used to estimate a company’s value by multiplying its share price by the number of shares available. The market cap is used for a real-time valuation of the company. It keeps on changing as per the share price as well as the volume of shares traded. MCap is an important characteristic of a company and is used by potential investors in understanding the risks of investing in the company.

Features of Market Cap

Features of Market Cap are:
1. Market capitalization helps investors in assessing the value of a company and also in comparing one company against another.
2. It helps to predict the future performance of the stock.
3. Market Cap helps in categorising companies as large-cap, mid-cap and small-caps.
4. Investors create a balanced portfolio with a mix of these companies.
5. A high market cap generally means that the company has a larger market presence with good brand recognition and is comparatively stable.

Factors which impact Market cap

Factors which impact Market cap are:
1. Fluctuations in the market price of a company’s share price can impact the MCap.
2. The demand for a company’s products or services impact its profitability and hence the Market Cap.
3. The reputation of a company, its performance and goodwill also affect its market cap.