Market capitalisation

The last traded share price multiplied by the total number of shares outstanding - the market's headline figure for the value of a company's equity.

Example

196 million shares at 47.95 gives a market capitalisation of 9,398.2m.

Important

It extrapolates a marginal price across every share, including the ones nobody is offering. A 1,000-share trade moving the price 0.15 changes the figure by 29.4m without anything happening to the business.

Related terms

Shares outstanding — The number of shares a company has issued and that are currently held by investors. The diluted figure adds shares that would exist if outstanding options and convertible instruments were exercised.
Enterprise value — The value of the whole business - what lenders and owners together have claims on. Equity value plus net debt.
Free float — The proportion of a company's shares actually available to trade, excluding stakes held by founders, governments, or long-term strategic holders.
Price discovery — The continuous process by which buyers and sellers transacting produce a current market price for an asset.

Lessons that explain it

Many venues, no closing bell, no reference price — The quote is for the next unit, not for your position, and there is no official price anywhere. What valuation models exist for this class are contested in a way that a bond discount or an equity multiple simply is not. (12 min)
A continuous auction: what the quote is, and what it is not — The price is what the marginal buyer and the marginal seller agreed a moment ago. It is a fact about two people, and it is not a valuation. (12 min)

All 578 terms in the Investing glossary