The Small-Cap Glossary: 47 Terms That Actually Matter

Marques Blank

Sep 2

5 min read

Updated: Sep 4

Every market niche runs on its own shorthand, and small caps run on more of it than most — a world of floats and breakpoints, ATMs that aren't cash machines and comps that aren't competitors. This glossary is the working vocabulary behind everything SCN publishes: 47 terms, defined the way practitioners actually use them. Bookmark it; our analyses link back here.

Size and structure

Market capitalization — Share price times shares outstanding — what the market says the whole company is worth. Every size label below is just a range of this number.
Small cap — Conventionally a company between roughly $250 million and $2 billion in market cap, though index definitions stretch far wider — the practical range is set by the Russell 2000's membership, not the textbook.
Mid cap / large cap — The next rungs up: mid caps roughly $2–10 billion, large caps above that. The dividing lines drift with the market.
Micro cap — Roughly $50–300 million. Coverage thins out dramatically down here — which is exactly where inefficiency lives.
Nano cap — Below roughly $50 million. Liquidity, not analysis, is usually the binding constraint.
Penny stock — A stock trading under $5, usually off-exchange. Price is not size: a $4 stock can be a $2 billion company, and a $40 stock can be a shell.
Shares outstanding — All shares issued and held. The denominator that turns price into market cap.
Float — The shares actually available to trade — outstanding minus insider, control and restricted stock. Small floats amplify every move, in both directions.
Free-float market cap — Market cap counting only the float. Index providers weight members this way, which is why float changes move index demand.
Liquidity — How much stock can be bought or sold without moving the price. The tax every small-cap investor pays and forgets to budget for.
Bid-ask spread — The gap between the best buying and selling price. In thin names the spread is a real cost — sometimes the whole edge.
Average daily volume (ADV) — How much stock trades in a typical session. Position sizes that dwarf ADV aren't positions; they're commitments.

Indexes and flows

Russell 2000 — The benchmark U.S. small-cap index: roughly the 1,001st through 3,000th largest U.S. companies. When people say “small caps rallied,” this is the scoreboard they mean.
Russell 3000 / Russell 1000 — The broad index of the 3,000 largest U.S. companies, and its large-cap top slice. The Russell 2000 is what's left after the top 1,000.
Reconstitution — The scheduled rebuild of index membership. As of 2026 the Russell indexes reconstitute twice a year — June and, for the first time, December — and the trade around it is one of the year's biggest liquidity events.
Rank day — The snapshot date when market caps are measured for reconstitution. Whatever a company is worth at that close decides its index fate — the next one is October 30.
Breakpoint — The market-cap line separating one index from another. After the June 2026 reconstitution the small-cap/large-cap line sat near $5.7 billion, with the Russell 2000's floor around $146 million.
Index inclusion — Getting added to a benchmark, which forces index funds to buy. One of the few mechanical, calendar-driven catalysts in markets.
Passive flows — Buying and selling done by index funds because the index changed, not because anyone formed an opinion. Mechanical money moves prices anyway.
Style indexes — Value and growth slices of the parent index. A stock can switch styles at reconstitution and see its shareholder base rotate.

Filings and results

10-K / 10-Q — The annual and quarterly reports — audited (10-K) and unaudited (10-Q). The primary documents behind every SCN earnings print.
8-K — The “something happened” filing: material events disclosed between quarters. Where small-cap surprises usually surface first.
EPS (earnings per share) — Net income divided by shares. Diluted EPS counts the shares that could exist — options, warrants, converts — and is the honest number.
Non-GAAP / adjusted — Earnings with certain costs excluded, as management prefers to be judged. Sometimes clarifying, sometimes cosmetic; always read the reconciliation.
Adjusted EBITDA — Earnings before interest, taxes, depreciation, amortization — and whatever else got adjusted out. The standard small-cap profitability yardstick, and the most abusable one.
Gross margin — Revenue minus direct costs, as a percentage. The first tell on pricing power and product mix.
SG&A — Selling, general and administrative expense — the overhead line. When SG&A grows faster than gross profit, the operating line goes underwater.
Same-store sales (comps) — Growth from locations open at least a year — retail's honest growth rate, with expansion stripped out. Build-A-Bear's summer stumble was a comps story.
Guidance — Management's forecast. In this tape, the guide moves stocks more than the quarter does — read the range before the beat.
Backlog — Contracted work not yet delivered. In project businesses it's the future revenue line — and the first thing to interrogate for timing risk.
Going concern — Auditor language for “this company may not survive twelve months.” The brightest red flag in filings.
Restatement — A correction of previously reported numbers. Sometimes clerical, sometimes the first domino.

Deals and capital

Uplisting — Graduating from the OTC markets to a national exchange. Our full playbook covers the requirements and what the move really signals.
Reverse split — Consolidating shares to raise the per-share price — 1-for-10 turns ten $0.50 shares into one $5 share. Housekeeping at modest ratios; a warning at extreme ones.
Dilution — New shares shrinking existing owners' slice of the company. The chronic small-cap disease; every raise is a dose.
Shelf registration (S-3) — Pre-approval to sell securities later, quickly. A loaded shelf isn't dilution yet — it's the capacity for it.
At-the-market (ATM) offering — Selling new shares quietly into daily trading volume at market prices. Efficient for the company; invisible pressure for holders.
PIPE — Private investment in public equity — a negotiated block sale to institutions, usually at a discount. Check who bought and on what terms.
Secondary offering — A marketed sale of new (or insider) shares. The discount and the use of proceeds tell you most of what you need.
Lockup — The period when insiders and deal participants can't sell. Post-listing charts often say less about demand than about what's still locked.
Insider buying (Form 4) — Executives and directors reporting their own trades. Open-market buys are the cleanest conviction signal small caps offer; sales are noisier.
Buyback — The company repurchasing its own shares. Accretive when the stock is cheap and the balance sheet can afford it — read both conditions.

Trading and analysis

Short interest — Shares sold short as a share of float. High short interest is an opinion crowd — and occasionally fuel.
Catalyst — A scheduled or expected event that can rerate a stock: earnings, FDA dates, index reconstitution, uplistings, contract awards.
Beat-and-fade — Printing a good quarter and giving back the pop the same day, usually on soft guidance. The defining 2026 earnings pattern.
Bull case / bear case — The strongest honest argument each way. If you can't state both, you don't have a view — you have a mood.
Position sizing — Deciding how much, which matters more than deciding what. In illiquid names, size is risk management.
Earnings print — A reported quarter — and SCN's house format for reading one fast: the filing, the context, bull, bear, and what to watch. See it applied to a live earnings week.

For the frameworks these terms plug into, start with how to analyze small-cap stocks and the SCN screening methodology.

SCN editorial — independent commentary for information only, not investment advice.