A stock with a market capitalization between $300 million and $2 billion is commonly called a small-cap stock. “Cap” is short for capitalization, meaning the market value investors assign to a company’s outstanding shares.
Market capitalization is calculated by multiplying a company’s share price by its shares outstanding. For example, a firm with 20 million shares trading at $25 per share has a market capitalization of $500 million, placing it in the stated small-cap range.
The boundaries are conventions, not universal laws. Financial institutions may use slightly different thresholds, and the ranges can shift as markets grow. Some classifications place the lower small-cap boundary at $250 million, while others use $300 million. Even so, with the bands specified in this question, small-cap is the canonical answer.
Small-cap companies are generally younger or less established than large-cap firms. They may offer stronger growth potential, but their shares can also be less liquid and more volatile. Mid-cap usually refers to the next larger group, while micro-cap describes still-smaller companies.