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Valuation Analysis

Views 26872022.08.03

What is Market Capitalization?

Market capitalization refers to the total stock value of a listed company's total outstanding shares calculated at market prices.

The Market Capitalization Formula

Formula: Market Cap = total outstanding shares × latest market price

Understanding what a company is worth is an important task, and often difficult to quickly and accurately ascertain. Market capitalization is a quick and easy method for estimating a company's value by extrapolating what the market thinks it is worth for publicly traded companies.

A company's market cap is first established via an initial public offering (IPO). Before an IPO, the company that wishes to go public enlists an investment bank to employ valuation techniques to derive a company's value and to determine how many shares will be offered to the public and at what price.

After a company goes public and starts trading on the exchange, its price is determined by supply and demand for its shares in the market. If there is a high demand for its shares due to favorable factors, the price would increase.

Companies are typically divided according to market capitalization: large-cap ($10 billion or more), mid-cap ($2 billion to $10 billion), and small-cap ($300 million to $2 billion).

How to find companies' Market Caps in moomoo?

Firstly entering the stock page, find the tab of "Quote", Then you can get the company's latest market cap. During the trading period, the market cap normally keeps changing as the market price changes.

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source: Investopedia

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