Glossary · Valuation
Market Capitalization
Market capitalization is the share price multiplied by total shares outstanding: the price the market puts on all of a company's equity. To compare the size of companies, look at market cap, not share price.
How to read it
The S&P 500 is weighted by market cap, so the larger the company, the more it moves the index. The ten largest companies account for more than 30% of the index's weight.
For the same 1% gain, a trillion-dollar company needs a hundred times as much new money as a ten-billion-dollar company, which is why a big company's move carries more weight.
Common pitfalls
- A high or low share price says nothing about whether a company is expensive. A $1,000 stock can be far cheaper than a $10 stock; what matters is market cap and valuation multiples.
On FinDog
In the heat map on the Market Overview, the area of each tile is the company's market cap. Each stock page shows the market cap and the stock's weight in the S&P 500.
Open Market Overview →Related terms
- S&P 500The S&P 500 is made up of roughly 500 large U.S.-listed companies, weighted by float-adjusted market cap. It covers about 80% of total U.S. stock market value and is the most widely used gauge of the U.S. large-cap market.
- Price-to-Sales (P/S)The price-to-sales ratio is market cap divided by trailing-twelve-month revenue. It is the most widely used valuation metric for companies that do not yet have steady profits.
Glossary entries are for investor education only and are not investment advice. About & Methodology · Disclaimer