# Market Capitalization Calculator

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## What is market capitalization?

Market capitalization (market cap) is the total value of a company's outstanding shares. In other words, it represents how the stock market currently values the company.

Market capitalization is a helpful metric for quickly estimating the company's size and assigning it to the proper category of large-cap, mid-cap, or small-cap companies.

The size of market capitalization determines the risk assigned to the company. The bigger companies tend to have less volatile valuations. For example, blue chips have more stable stock prices than small companies.

## How to calculate the market capitalization?

Market capitalization is a simple concept. In order to calculate its value, you only need to multiply the number of outstanding shares by their current price.

### Market capitalization formula

Market_Cap = SharePrice * NumberOfShares

Where:

• SharePrice - the current price of a single share
• NumberOfShares - the total number of outstanding shares

Example market share calculation

Let's calculate the market cap of Tesla Motors (TSLA) for July 22nd, 2022.

1. The total number of outstanding Tesla shares is 1.04 billion.
2. The current price of a single \$816.73
3. Now let's substitute the data into the formula:
4. Market_Cap = SharePrice * NumberOfShares = \$816.73 * 1,040,000,000 = \$849,400,000,000
5.

So the market cap of Tesla Motors on the 22nd of July 2022 was \$849,4 billion. Not bad!

## Other methods of company valuation

The market cap is a simple and easy-to-calculate metric, but there are other more advanced and more accurate methods of a company's valuation.

One is the Discounted Cash Flow Calculator (DCF) method, and the other is EBITDA Multiple

### Authors

Created by Lucas Krysiak on 2022-07-23 14:41:55 | Last review by Mike Kozminsky on 2022-09-15 14:09:31