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Reading a business

Lesson 79 · Written for kid, teen, and little

Small Companies vs Giant Companies

How big a company is changes how its stock tends to behave.

The idea

Companies come in wildly different sizes, and investors measure size with market cap: the price of one share multiplied by how many shares exist. A small company can grow quickly, but its share price often swings up and down more sharply. A giant company usually moves more slowly and tends to be steadier, though it can still lose value. Neither size is automatically better — they just behave differently, which is why many investors hold a mix. 🌱

A

Words to know

5

Share

One small piece of a company that you can own. Buy 3 shares and you own three of those pieces.

Market cap

The price of one share times the number of shares. A $50 share with 1 million shares is a $50 million company.

Small-cap

A company with a small market cap, usually a business you may never have heard of. A regional chain of 20 shops, not a global brand.

Large-cap

A company with a very big market cap, often a brand you already know. Apple and Microsoft are large-caps.

Volatile

A price that jumps up and down a lot instead of moving gently. Moving from $10 to $13 and back inside a week is volatile.

Try it — no accountTrue or false

Swipe true or false to check what you know about company size.

Card 1 of 4

Market cap means share price times the number of shares.

Swipe the card — or tap.

In the full lesson

  1. 1True or false
  2. 2Put it in order
  3. 3Make the call

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