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Glossary
Valuation

Market capitalisation

The total value the market puts on all a company's shares.

Share price multiplied by the number of shares. This, not the share price, is how big a company is. A £2 share and a £2,000 share tell you nothing until you know how many exist.

Size itself is information. A £1bn company can plausibly become a £10bn one. A £2 trillion company cannot easily become a £20 trillion one, because that would exceed the value of most national economies.

The formula
Market cap = Share price × Shares outstanding
Figure

What you actually own

Founders50%
Institutions30%
Other investors15%
You5%

A share is a slice of the whole company: its profits, its assets and its votes. Your slice is small, and it is a real claim, not a bet on a ticker.

Why it matters

It is the only way to compare the size of two companies, and it bounds how much growth is even possible.

The mistake everyone makes

Believing a low share price means a small or cheap company.

Related terms

Enterprise value
What it would really cost to buy the whole company, debt included.
P/E ratio
How many years of current profit you are paying for the shares.

See Market capitalisation on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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