Micro Cap

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DEFINITION of 'Micro Cap'

A publicly traded company in the United States that has a market capitalization between approximately $50 million and $300 million. Micro-cap companies have greater market capitalization than nano caps, and less than small, mid, large and mega-cap corporations. Companies with larger market capitalization do not automatically have stock prices that are higher than those companies with smaller market capitalizations. Generally, the larger the market capitalization, the less risky the investment and smaller the potential returns. The smaller the market capitalization, the riskier the investment and the greater the potential returns.


BREAKING DOWN 'Micro Cap'

Companies with less than $50 million in market capitalization are frequently referred to as nano caps. Both nano caps and micro caps are known for their volatility and as such, tend to be considered more risky than companies with larger market capitalization. Market capitalization measures the market value of a company's outstanding shares, calculated by multiplying the stock's price by the total number of shares outstanding.

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