How to Value a Penny Stock - Market Cap

Penny stocks or penny shares are those that trade at very low price and market capitalization. Here you will learn how to calculate market cap of penny stocks:

First you need to find out the total number of shares issued and outstanding as well as the current stock price of the shares. Then, you can calculate the market capitalization of penny stocks by simply multiplying the shares outstanding by the price per share.

Market cap = (Number of outstanding shares) x (Current stock price)

Example 1:
The current stock price of Gold industries Ltd is $0.80 and the outstanding share of the company is 2.5 billion, then the market capitalization of the company will be: $0.80 * 2.5 billion =  2 billion dollars.

Example 2:
If ABC Company's stock is selling for $0.50 per share and there are 10,000 shares issued by the company, then the market cap for the company will be: $5,000.

In general, the larger the market cap the more stable the stock price over time and the lower the risk.