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A micro-cap-stock is a stock with a very small market capitalization. Typically, a micro-cap stock is acknowledged as such if its market capitalization falls between 50 and 500 million dollars. However, it must be noted that micro-cap stock guidelines, as well as other categorizations such as large-caps and small-caps are used somewhat loosely. More precise capitalization guidelines of a micro-cap stock and other classifications are often dictated by financial institutions. Micro-cap stock companies are considered extremely volatile. Partially, it is because the market capitalization of micro-cap stock companies is simply less (by definition) than those of larger corporations thereby allowing the price of the micro-cap stock to be more easily influenced by a single large trade. A stock that is smaller than a micro-cap stock is referred to as a nano-cap stock. |
