Another illustrative example is the S&P MidCap index which essentially takes the S&P 500 index and 'tosses out' the biggest 100 companies so as to focus solely on the 400 smaller 'up-and-comers' (which in the right environment can outperform their larger rivals). For instance, a mutual fund that is focused solely on Large Cap stocks may for example only be interested in those companies sized $10 billion or larger. This can have a direct impact on which indices will include the stock, and which mutual funds and ETFs are willing to own the stock. UA:Īnother reason market capitalization is important is where it places a company in terms of its size tier in relation to peers - much like the way a mid-size sedan is typically compared to other mid-size sedans (and not SUV's). Companies By Market Capitalization »īelow is a three month price history chart comparing the stock performance of DBX vs. In the case of Dropbox Inc (NASDAQ: DBX), the market cap is now $4.65B, versus Under Armour Inc (NYSE: UA) at $4.33B. But comparing market capitalization (factoring in those share counts) creates a true 'apples-to-apples' comparison of the value of two stocks. Many beginning investors look at one stock trading at $10 and another trading at $20 and mistakenly think the latter company is worth twice as much - that of course is a completely meaningless comparison without knowing how many shares of each company exist.

The most basic reason is that it gives a true comparison of the value attributed by the stock market to a given company's stock. Market capitalization is an important data point for investors to keep an eye on, for various reasons. Click here to find out the top S&P 500 components ordered by average analyst rating » In the latest look at stocks ordered by largest market capitalization, Russell 3000 component Dropbox Inc (NASDAQ: DBX) was identified as having a larger market cap than the smaller end of the S&P 500, for example Under Armour Inc (NYSE: UA), according to The Online Investor. Dropbox Larger Than S&P 500 Component Under Armour By The Online Investor Staff, Wednesday, January 15, 4:37 PM ET

Dropbox stock price graph