UNDERSTANDING

MARKET
CAPITALIZATION:
TYPES, EXPLANATION,
AND PRACTICAL
APPLICATIONS FOR
INVESTORS

Aniket Paulzade
 UNDERSTANDING MARKET
CAPITALIZATION

Market capitalization is a measure of a

company's size and value. It is calculated by
multiplying the number of outstanding
shares by the current market price per share.
In this presentation, we will explore the
different types of market capitalization,
explain how it works, and discuss practical
applications for investors.
WHAT IS MARKET CAPITALIZATION?

Market capitalization is the total value of a

company's outstanding shares. It is
calculated by multiplying the number of
outstanding shares by the current market
price per share. This is an important metric
for investors as it can help them determine a
company's size, growth potential, and risk.
TYPES OF MARKET CAPITALIZATION

There are three main types of market

capitalization: small-cap, mid-cap, and
large-cap. Small-cap companies have a
market capitalization of less than $2 billion,
mid-cap companies have a market
capitalization between $2 billion and $10
billion, and large-cap companies have a
market capitalization of over $10 billion.
 SMALL-CAP COMPANIES

Small-cap companies are often newer or less

established companies with a market
capitalization of less than $2 billion. They can
offer higher growth potential but also come with
higher risk. These companies are often
overlooked by larger investors and can be more
volatile.
 MID-CAP COMPANIES

Mid-cap companies have a market

capitalization between $2 billion and $10
billion. They are often more established than
small-cap companies but still have room for
growth. These companies can offer a
balance of growth potential and stability.
 LARGE-CAP COMPANIES

Large-cap companies have a market

capitalization of over $10 billion. They
are often well-established and have a
history of stability. These companies can
offer lower growth potential but also
come with lower risk. They are often
favored by larger investors and can be
less volatile.
MARKET CAPITALIZATION AND INVESTING

Market capitalization can be a useful tool for

investors when deciding which companies
to invest in. Small-cap companies can offer
higher growth potential but also come with
higher risk. Large-cap companies can offer
lower growth potential but also come with
lower risk. Mid-cap companies can offer a
balance of growth potential and stability.
LIMITATIONS OF MARKET CAPITALIZATION

Market capitalization is not a perfect metric

and has its limitations. It only takes into
account the current market price and number
of outstanding shares, and does not consider
other factors such as debt, assets, and
earnings. It is important for investors to use
market capitalization in conjunction with other
metrics when making investment decisions.
 CONCLUSION

Market capitalization is an important metric for investors when evaluating

companies. It can help investors determine a company's size, growth
potential, and risk. By understanding the different types of market
capitalization, investors can make informed investment decisions.
However, it is important to use market capitalization in conjunction with
other metrics and to remember its limitations.
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