What is Market Capitalization or Market Cap? A Simple Explanation for Kids & Teens

What's Market Cap / Market Capitalization? Stock Market 101: Easy Peasy Finance for Kids & Beginners

Introduction to Market Capitalization for Kids and Teens

This video explains the concept of market capitalization in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about market cap, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

What is Market Cap or Market Capitalization - A Simple Explanation for Kids Teens Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

Howdy Wall Street Willy.

I heard that Facebook had a really high market cap, but…

What is market cap anyway?

Well, market cap, also known as market capitalization, is the market value of a company. It is basically the number of stocks, or shares, in the company, times the stock price.

Market Capitalization or Market Cap = No. of Stocks in the Company X The Stock Price

So for example, if there are 1,000 shares in a company, and each share is $100, then the market cap of the company is $100,000 dollars.

Market Capitalization or Market Cap = 1,000 X $100 = $100,000

But what are the different kinds of market capitalization?

The different types of market capitalization are small cap, mid cap, and large cap.

There’s no clear definition of the value of the company for each, but generally speaking, more than $10 billion of market cap is large cap, mid cap would be $2 – $10 billion, and small cap would be less than $2 billion.

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How is market capitalization even relevant for my investment strategy?

Well generally, the higher the market cap, the larger the company, and the broader its reach.

And therefore, it is also usually less risky to invest in.

Market Cap or Market Capitalization for Kids Teens Beginners - Importance for Investing
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For example, Disney’s market cap is $150 billion, and it’s a large company. It’s a household name, and pretty much everybody knows about it.

$150 Billion!! That is so AWESOME!

Yes, it is. That is why it is such a well known company.

And normally, a company starts out small, and then if it’s very successful, it becomes a mid cap company.

But then, if it’s even more successful, it can hopefully become a large cap company.

Wow, thank you so much for teaching me what a market cap is, Wall Street Willy

You’re welcome, Sooper Cooper. Remember, finance is your friend!

Video Featured in the Below Financial Literacy Course for Kids & Teens

Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens

Podcast: What is Market Market Capitalization

Market Capitalization
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