What it is
The price the public market is currently putting on the entire equity of a business. Apple at $190/share with 15B shares = $2.85T market cap.What it is NOT
Market cap is not the cost of buying the whole business. That's enterprise value (market cap + debt − cash). Market cap is just the equity slice.Market cap is not the company's "size" in any economic sense. Two companies at $10B market cap can have wildly different revenue, employees, profit, and economic footprint.
How it's used
- Index inclusion: most major indices (S&P 500, Russell 1000) weight by market cap
- Liquidity: larger market cap = more shares trading per day = easier to buy/sell without moving the price
- Categorisation: