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Market Capitalization
Do you already know and understand the boring title of today’s blog? If so, pass Go and (Monopoly-style) collect $200. In other words, you’re outta here. See you tomorrow.
If you don’t… this blog’s for you.
Market caps are the real price tags of companies. The math is simple. You multiply two numbers:
Market capitalization = Share Price x Total Number of Shares Outstanding
Most people only focus on share prices. Like Meta Platforms today, they see: “$752.” But that’s just one multiplicand! How many shares of ownership exist? (Look it up at Fool.com: $META has 2.51 billion shares*.)
Ready to do your first market cap?
$752 x 2,510,000,000 = $1.89 trillion
Meta Platforms, the former Facebook, is a trillion-dollar company. And now you know why. It’s as simple as realizing that every pie slice is a certain size (e.g., “752”), but what’s critical is: How many slices are there? This is where novices fall down. They don’t even know to ask.
Market cap gives you a quick read on every company’s size. You may see two stocks trading at $752 a share, but one may have a $1 trillion market cap, the other just $1 billion. Most people only see the $752, not recognizing that one of the companies has 1,000 times more shares and is thus 1,000 times larger than the other. They’ve never learned market capitalization.
Indeed, when investing greenhorns see “$752,” they’ll often think “too expensive” and opt instead to buy some penny stock trading at 75.2 cents. That’s the number one reason people buy crummy stocks, because they supposedly look “cheap.” Only looking at the share price and thinking “buy low,” they spend their precious savings on junk.
I favor Rule Breakers with a market cap sweet spot of $5B-$25B. They’re still small enough to have big growth ahead, but big enough to actually realize that growth! I would so rather buy a $100 billion market cap, than a $100 million one.
So now you know, please know, your market caps!
(Help yourself out; come join us and play The Market Cap Game Show.)
*All numbers are as of August 26, 2025.