Capitalization is the product of price and shares. It indicates how large a company is investing in DoorDash for beginners the financial world.
Tiers
- Tiny cap: under 300M.
- Emerging cap: mid small.
- Mid cap: 2B10B.
- Big cap: 10B+.
- Super large cap: hundreds of billions.
Examples:
- Tech: Apple.
- Energy: Shell.
- Finance: JPMorgan.
- Healthcare: Pfizer.
What it helps with
- Trading ease.
- Stability.
- Portfolio balance.
Cautions
- Ignores debt.
- Enterprise value is better.
- Different fundamentals.
Changing share count
- Acquisitions increase.
- Buybacks reduce shares, boost EPS.
Portfolio use
- Mix large cap safety with small cap growth.
- Spread across finance.
- Match with time horizon.
Bottom line
Market cap is a shortcut, but always pair it with valuation. It shapes building a balanced portfolio.
