Market capitalization is the total market value of a company and the simplest way to gauge its size. Many beginners assume a more expensive share means a bigger company — a common mistake that market cap corrects.
Market Cap Formula
Market cap = share price × shares outstanding
Why Share Price Alone Is Not Enough
Compare two companies:
Company A: 10 SAR × 1,000M shares = 10,000M
Company B: 200 SAR × 20M shares = 4,000M
Even though B's share price is far higher, A is the larger company. Educational example only.
Size Categories
- Large-cap: big, usually more stable companies (e.g. major banks and Aramco).
- Mid-cap: a balance of growth and stability.
- Small-cap: higher growth potential with more risk and volatility.
Market Cap vs. Enterprise Value
Market cap measures equity only. Enterprise value adds debt and subtracts cash and underlies metrics like EV/EBITDA. See the PE ratio guide for related valuation metrics.
How to Use It on Wrqti
Market cap appears at the top of every stock page in Stock Insights, helping you compare company sizes within a sector and put other metrics in context.
Summary
Market cap is better than share price for gauging company size, but it is a size measure only and does not by itself tell you whether a stock is cheap or expensive.
FAQ
What is market cap in simple terms?
It is the total market value of a company's shares, calculated as share price times shares outstanding. It reflects the company's size as valued by the market.
Does a higher share price mean a bigger company?
No. Share price alone does not indicate size. A company priced at 10 SAR with a huge share count can be larger than one priced at 200 SAR.
How does market cap differ from enterprise value?
Market cap covers equity only, while enterprise value adds debt and subtracts cash, giving a fuller picture of the cost to acquire the whole business.
Is market cap a recommendation?
No. It is a size measure only and does not by itself tell you whether a stock is cheap or expensive.
Also read the Financial Disclaimer.