What is a small cap stock? It’s a “smaller” company—defined as one with a market capitalization (“cap”) under about a billion dollars.
Market capitalization (also called “market cap”) is just a fancy way of saying the total value of a company’s shares of stock. This is calculated by taking a company’s price per share and multiplying it by the total number of shares.
These companies are considered “small”, because most companies that are publicly listed on a stock exchange are substantially larger than this.
The U.S. small cap segment contains only about 2,000 stocks, which is a pretty small number!
Globally, there are approximately 4,200 stocks across 48 countries that qualify as “small cap” stocks.