Betta Signals

Learn · Company fundamentals

Market capitalization

Market capitalization is the market value of a company's outstanding equity, commonly calculated as share price multiplied by shares outstanding.

By Betta Signals Research Desk · Reviewed October 24, 2026

Plain-English definition: Market capitalization is the market value of a company's outstanding equity, commonly calculated as share price multiplied by shares outstanding.[1]

How the term is used

Market capitalization is an equity-market value based on share price and shares outstanding. Revenue is a separate operating measure based on sales, so the two numbers answer different questions.[1][2]

What to check before relying on it

Use the correct share count and share classes at the same date as the price. Treasury shares, dual classes, recent issuance, and convertibles can complicate comparisons.

Example

A company with 100 million shares at $20 has a $2 billion market cap, even if its annual sales or accounting book value are much higher or lower.

StockShare classPrice-to-earnings ratio (P/E)

Research last reviewed: October 24, 2026. This definition is educational and does not evaluate a particular security.

Sources

  1. Investor.gov: Market Capitalization — market capitalization calculated from share price and shares outstanding. Accessed October 24, 2026.
  2. Investor.gov: Revenue — revenue as money generated from selling goods and services. Accessed October 24, 2026.