Fully diluted market capitalisation represents the total value of a company’s shares if all possible securities, such as stock options, convertible bonds, warrants, and restricted stock units (RSUs), were converted into common stock. Unlike basic market cap, which only considers currently outstanding shares, fully diluted market cap accounts for potential future dilution, giving investors a more comprehensive view of a company’s valuation. This metric is particularly important for startups and high-growth companies that issue large amounts of stock-based compensation or convertible instruments. By calculating the fully diluted market cap, investors can assess the true ownership stake and earnings per share (EPS) impact if all convertible securities were exercised. For example, if a company has 10 million outstanding shares and 2 million in potential dilutive securities, its fully diluted share count would be 12 million. Multiplying this by the current stock price yields the fully diluted market cap. This figure helps investors evaluate whether a stock is overvalued or undervalued, especially in cases where significant dilution is expected. Analysts and traders use this metric to make more informed investment decisions, particularly when comparing companies with different capital structures. Understanding fully diluted market cap is crucial for assessing long-term value and potential shareholder dilution risks.