Sometimes people refer to kids as "ankle biters." There's also a quasi foot fetish thing going on here. And other times, they give the name to small dogs. The phrase could also theoretically provide the title to really tame spin-off of Fifty Shades of Grey. But none of that is the focus here.
In a financial context, ankle biter serves as a nickname for a stock that has a small market cap. More formally, these shares are known as micro-cap stocks.
A market cap, or market capitalization, measures the value of a company's outstanding stock. Multiply a company's current stock price with the number of shares it has outstanding and the result gives you its market cap.
What designates a micro-cap/ankle biter stock is somewhat in the eye of the beholder. In general, it means the market cap is very small, but there's no formal rule as to where the cut off exists. It's like figuring how short a short person is. To LeBron James, almost everyone is short. To a racing jockey, almost no one is.
Typically, if a stock has a market cap below $500 million, it is getting to ankle biter territory. However, most people don't really start to apply the term until it gets below $300 million or lower.
Related or Semi-related Video
Finance: What is Cannibalization?14 Views
finance a la shmoop -what is cannibalization ? pass me some more leg.
yeah the real Paleo diet. so yeah cannibalization in the business [leg and foot on a plate]
world isn't all that different from this. you'll hear the catchphrase you'd better
cannibalize your own business before someone else does. well what does that
mean? well the newspaper industry had a great gig for about 250 years. its profit
Center was the help-wanted slash classified ad pages. in a major Metro
like Los Angeles they'd sell one page for 80 grand. that's ink on paper and had
a whole bunch of help-wanted ads on it and that page would cost them about 10 [classified page shown]
grand to produce. 70 grand in profit for a big page like that LA. yeah great great
work. if you can get it well then came along the commercial
Internet in the mid-1990s. instead of cannibalizing itself and building or
buying its own classifieds business albeit at lower margin it more or less
hid like a scared ostrich from the much more competitive and lower profit margin
world of the internet. cannibalizing for the industry would have meant that yes
they put out Help Wanted sections at vastly lower prices like the equivalent
of a page that instead of charging advertisers in LA 80 grand charging them [business models listed]
12 grand or less on a page that cost them maybe 5 grand to put out. and why
did it cost less? like not 10 grand but just 5 ? well a web server is way cheaper
to run then killing and pressing a bunch of dead trees, printing them with union
labor, delivering them and so on. so less revenues less profits but still
a relevant player in the help-wanted category. so what happened? well
Craigslist happened. and so did monster.com and indeed and Glassdoor and
a bunch of other specialty market players like dice in technology. while [glassdoor website pictured]
the newspaper industry acted like the local monopoly it was for 250 years and
instead of cannibalizing itself and living with lower profit margins, but
still living well it ignored the new threat of the internet and well it
starved to death. and now it's the internet company
tasting the sweet flavor of victory and the newspaper companies have well turned
into the modern-day Donner Party, sadly. [Donner party defined]
Up Next
What are pink sheets? And can we bleach them to make them white again?
Over the counter refers to a trade transacted within a network of other dealers who are all trading stocks.
In trying to assess the value of a company, market capitalization refers to the number of stock shares times the stock price. Perceived value in th...