Niocorp Developments Ltd (NB)

[NavyHusker]

Market Capitalization is simply the product of multiplying the share price by the number of total shares outstanding as Prudent Capitalist pointed out. Why it matters is another thing entirely.

If market cap is low, then institutions & large investors can't make much of an investment to affect their portfolio without artificially driving up (or down) the price of the stock by their own buying or selling. It can also affect how much they would even desire to invest in a company because it could cause them to take a huge controlling interest in the stock in order to make a noticeable investment in their portfolio.

For example, Berkshire Hathaway is not likely to invest heavily in NioCorp because at roughly $250m in Market Cap, even it the investment were to double, how much of a difference can that make to their portfolio? Realistically it cannot do much more than a fraction of a %. It could however invest in Apple or Amazon or Exxon or McDonalds without artificially driving up (or down) the stock price (ignoring the affect that simply the news of them investing in something moves the price).

Alternatively, Market Cap can help investors understand how much a controlling interest in the company could cost. For example, if I wanted to control NioCorp, I could target 51% of roughly 275M shares at about US$0.80 would require about 140M shares or US$112M. It would obviously cost more than that as the is not enough daily volume of shares being traded that you could acquire enough shares without significantly affecting the price and changing the calculations.

Market Cap generally just means how much is a company worth.