Market Capitalization - Categorization of Companies By Capitalization

Categorization of Companies By Capitalization

Traditionally, companies were divided into large-cap, mid-cap, and small-cap. The terms mega-cap and micro-cap have also since come into common use, and nano-cap is sometimes heard. Different numbers are used by different indexes; there is no official definition of, or full consensus agreement about, the exact cutoff values. The cutoffs may be defined as percentiles rather than in nominal dollars. The definitions expressed in nominal dollars need to be adjusted over the decades due to inflation, population change, and overall market valuation (for example, $1 billion was a large market cap in 1950, but it is not very large now), and they may be different for different countries. A rule of thumb may look like:

• Mega-cap: Over $200 billion
• Large-cap: Over $10 billion
• Mid-cap: $2 billion–$10 billion
• Small-cap: $250 million–$2 billion
• Micro-cap: Below $250 million
• Nano-cap: Below $50 million

"Cap" is short for capitalization, a measure by which a company's size is classified. Big/Large caps are companies that have a market cap between $10–200 billion dollars. Mid caps range from $2 billion to $10 billion dollars. Small caps are typically new or relatively young companies and have a market cap between $100 million to $1 billion dollars. SmallCap's track record is not as lengthy as that of the Mid to MegaCaps. SmallCaps present the possibility of greater capital appreciation, but at greater risk.