Definition: market cap
(market CAPitalization) The sum derived from the current stock price per share times the total number of shares outstanding. Although the market cap of a company is an indication of the value of the company, it is only a temporary metric based on the current stock market. The true value of the company (its profits, product positioning, balance sheet, etc.) may not be reflected in the market cap. Of course, the perfect example occurred during the dot-com explosion of the late 1990s, when the market caps of many companies that never made a dime in profit rose to astronomical heights. Conversely, a company can be doing well, but still have a low market cap if its products and reputation have not caught the fancy of the masses.