What is market capitalization?

A company's market cap is its worth based on the number of outstanding shares and the current market price per share. A market capitalization is a statistic used by investors to assess the worth of a publicly listed firm. The initial market cap of a company is set at the time of its initial public offering (IPO).

One useful statistic for investors examining company size and growth prospects is market capitalization. It allows for the rapid and easy comparison of two or more stocks. Before an investor purchases shares of a stock, the market cap provides a glimpse into its risk potential.

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