Reading a Company
Intermediate3 Min Read
Market Cap, Float and Splits
A company's real size is not the share price — it's the price times the share count.
"This stock is $8, it's so cheap" is an economically empty sentence. What a company costs to buy is not its share price but its market cap.
Why the Price Misleads
The share count is entirely the company's own choice. Two companies of equal size may have split their capital into 100 million pieces and 10 billion pieces. The first trades at $400, the second at $4 — and they can be exactly the same size.
Size Classes
| Class | Market cap | Character |
|---|---|---|
| Mega cap | Over $200B | Moves the index single-handedly |
| Large cap | $10–200B | The body of the S&P 500 |
| Mid cap | $2–10B | Between growth and maturity |
| Small cap | $300M – $2B | Volatile; Russell 2000 territory |
| Micro cap | Under $300M | Liquidity problems; be careful |
Size is not just a label — it is a risk description: as size shrinks, volatility rises, spreads widen and a single headline moves the price more.
Float
Not all outstanding shares circulate. What remains outside founders', employees' and locked-up holdings is the float.
With a small float, the same size of buying moves the price more. This is the main reason newly listed companies swing so hard in the first months; when the lock-up expires, supply jumps and the price feels the pressure.
Splits and Reverse Splits
Split: the company divides each share into several. A $900 stock split 3-for-1 becomes $300, and your share count triples. Your portfolio value doesn't change.
The goal is psychological, not economic: make the price look accessible, improve liquidity.
Reverse split: the share count is reduced and the price rises. Usually done to escape the exchange's minimum-price rule — and it is rarely a good sign.
Enterprise Value
Market cap is the price of the company's equity; it excludes debt. If you were buying the whole company, you would be assuming its debt too.
Enterprise value = market cap + net debt
When comparing two indebted companies, enterprise value is more honest than market cap. Of two companies with equal market caps, the indebted one is actually the more expensive.
Where You'll See It on This Site
Market cap appears in the metrics card on the stock page and on the cards of the Earnings screen. It sits on the earnings card deliberately: "revenue estimate: $2 billion" means nothing until you know whether the company is worth $20 billion or $2 trillion.