MARKET CAP ? DEFİNED & EXPLAİNED

An example of market capitalization

Here's Costco Wholesale (NASDAQ) as an example. At recent prices, Costco shares sell for $521, with 441.52 million shares outstanding. In this case, $521 times 443.88 million equals a $230.97 billion market cap.
But why is market cap important and how should you use it? It's one of the best measures of a publicly traded company's size, which can tell you a lot about what to expect if you buy its stock.

• Large companies tend to have more stable and mature businesses, having proven themselves over time and weathered difficult business conditions to emerge stronger. However, the growth prospects for large companies can be limited because they've already taken advantage of their primary opportunities to grow to their current size.
• Smaller companies often have more room to grow, but they are typically younger, with riskier business models that haven't yet proved themselves. Their odds of failure can be higher than those of larger companies, which presents added risk.

Here's a quick breakdown of how market cap ranges are often segmented across companies of different sizes:
Mega cap More than $200 billion
Large cap $10 billion to $200 billion
Mid cap$2 billion to $10 billion
Small cap$300 million to $2 billion

1. Micro cap$50 million to $300 million

How to use market cap

Market cap is helpful when evaluating a company's size. But don't let the market value of a company cause you to dismiss large- or even mega-cap stocks as "too big to buy." The global economy is enormous, serving more than 7 billion people and with a fast-growing middle class. A $10 billion company that serves a multi-trillion-dollar market can grow substantially.
Moreover, companies can deliver strong per-share returns without expanding their market cap fast. Share repurchases that reduce the share count reward long-term investors with a bigger piece of the company, while dividends put money directly back into your pocket. These two things combined can significantly reduce how much market cap needs to grow for investors to get above-average returns.