Market capitalization, or market cap, is a key metric used by investors to evaluate a company's size and financial performance in the stock market. It is calculated by multiplying the total number of outstanding shares by the current market price per share. Market cap helps investors determine the risk and potential return of investing in a particular stock. Companies with large market caps are typically more stable and less volatile, making them a safer investment option. On the other hand, small-cap or micro-cap stocks may offer higher returns but come with greater risk. Investors also use market cap to classify stocks into different categories, such as large-cap, mid-cap, and small-cap. Large-cap stocks generally belong to well-established companies with a market cap exceeding $10 billion, while small-cap stocks are typically associated with smaller companies with a market cap below $2 billion. Understanding market capitalization is essential for investors to make informed decisions and build a diversified portfolio. By considering a company's market cap, investors can better assess its growth potential, financial stability, and overall performance in the stock market.