Definition
Market cap is the simplest measure of company size. Share price alone says nothing about size, because a $400 stock with few shares can be smaller than a $20 stock with many. PDB's scanners group companies as micro (under $300M), small ($300M to $2B), mid ($2B to $10B), large ($10B to $200B) and mega (over $200B).
Formula
Market cap = share price x shares outstanding
How it is used
Size shapes liquidity, volatility and which funds can own a stock.
Watch out for
Cap bands vary slightly between data providers, so a company near a boundary can be labeled differently elsewhere.
Example
Hypothetical exampleA company with 50 million shares trading at $40 has a market cap of $2 billion.