Micro-cap stock
Micro-cap stock
Micro-Cap Stock
Micro-cap stock.
A micro-cap stock is one with a smaller market capitalization -- sometimes much smaller -- than stocks described as small-caps. (Market capitalization is figured by multiplying the current market value by the number of outstanding shares.)
The cut-off for deciding that a stock belongs in one category or the other is arbitrary. However, the capitalization thresholds currently being suggested for micro-caps range from $50 million to $150 million.
Micro-caps are not only the smallest of the publicly traded corporations, but they are also the most volatile. That's partly because they often lack the reserves that may allow a larger company to weather rough periods.
And there are generally relatively few shares of a micro-cap company, so a large transaction may affect the stock's price quite a bit. In contrast, a similar transaction might not affect the stock price of a larger company that had many more shares in the market quite as much.