Also called Market capitalisation, Market capitalization

Market cap

What the market currently values the equity at.

Updated 2026-09-03

How it is calculated

Market cap = price × shares outstanding

Market capitalisation is what the market currently values the equity at: the share price multiplied by the number of shares. It is the price of the whole company's stock, and it is the figure a valuation is ultimately arguing with.

market cap = price × shares outstanding

It values the SHARES. enterprise value values the business, and the two differ by net debt.

The distinction matters when comparing companies. Two businesses with identical operations and identical market caps are not equally priced if one carries $50B of debt and the other holds $50B of cash. The one with debt is a $50B-more-expensive purchase, because whoever buys it inherits the obligation.

Market cap also moves for reasons that have nothing to do with the business: index inclusion, a large fund rebalancing, a short squeeze. Intrinsic value does not move for any of those, which is the entire point of computing it separately.

See also

  • Enterprise value — The value of the whole operating business, before asking who has a claim on it. Debt holders are paid before shareholders, so this is not yet what the shares are worth.
  • Equity value — What is left for shareholders once the lenders have been paid.
  • Shares outstanding — The share count that converts a whole-company equity value into a per-share figure. Getting it wrong scales every valuation by exactly the same error.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

IsiofiaIsiofia