An Investor’s Guide to Shares Outstanding vs Public Float

The number of outstanding shares of a company changes constantly and is used to calculate its market capitalization. This is done by multiplying the total shares outstanding by the current price per share. So a company with 10 million shares outstanding and a share price of $5 has a market cap of $50 million. You can find this figure on stock listings and through stock data providers. The total number of common stock shares that have been issued or purchased are the shares outstanding, which is also known as issued stock or stock outstanding.

It doesn’t mean that a company will issue all the shares to the public just because it can issue a certain number of shares. Companies will typically keep a portion of the shares in their own treasury for many reasons. Shares outstanding refers to all the shares that are held by all stockholders. A buyback announcement usually gives stocks a boost because traders tend to view buybacks as bullish catalysts. Shares outstanding can never be more than the number of authorized shares.

Shares Outstanding vs. Floating Stock: What’s the Difference?

Many companies offer stock options and warrants in addition to the stocks they issue to investors and executives. These are instruments that give the holder a right to purchase more stock from the company’s treasury. The float and shares outstanding increase and the number of treasury stocks decreases every time one of these instruments is activated. The float is the number of shares that are available for daily trading on the stock exchanges.

Outstanding shares: meaning and types

Investors can look at any number of metrics to make their investment decisions. When it comes to stocks, a company’s outstanding and floating shares can provide some very important information about the organization. Outstanding shares highlight the structure of a company’s ownership while its floating shares indicate how many shares are available for public trading. If you’re looking at buying stock, you can find this information is available on financial statements and through stock exchange websites. Large lot trades by investors of closely held shares could significantly affect the stock’s price and the stock’s volatility.

Floating Stock

For example, let’s say Company ABC has 1 million shares outstanding and 750,000 floating shares. This would mean that one-quarter (the difference between the two) of the company’s stock is held by employees and company insiders and is subject to selling restrictions. When you view a company’s stock quote in the financial media or on your trading platform, you’ll often see both numbers listed in the quote details. A company’s public float is often expressed as a figure or a percentage of the company’s total outstanding shares. For example, if a company has 10 million shares outstanding and its CEO holds 2 million of those, the company has 8 million floating shares, or 80 percent float. However, a publicly traded company also has issued shares and outstanding shares.

What does outstanding shares vs float tell investors?

• While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
• For example, instead of going out frequently with friends or your partner, try some game nights at home.
• Calculating floating stock requires you to subtract the number of closely held and restricted shares from the number of outstanding shares.
• Other 5,000 shares are owned by the administration (including the CEO).
• This is important to know because the number of shares outstanding can be far lower than the number of shares issued.
• Other companies may explicitly list their outstanding shares as a line item in the equity section of their balance sheet.

Most investors prefer stocks with greater liquidity, but a lot of closely-held shares can be a signal of insider bullishness. In this article, we’ll break down these two types of shares — shares outstanding vs float — to help you understand the simple difference. The float is the portion of outstanding shares that’s most relevant for smaller investors.

Assume a corporation releases 50% of its entire holdings in the format of 100 shares of stock. In this example, any individual who purchases one share of stock owns 0.5 percent of the firm. This essay will illustrate the distinction between outstanding shares and Float. James Woodruff has been a management consultant to more than 1,000 small businesses. As a senior management consultant and owner, he used his technical expertise to conduct an analysis of a company’s operational, financial and business management issues. James has been writing business and finance related topics for work.chron, bizfluent.com, smallbusiness.chron.com and e-commerce websites since 2007.

Companies may do this to increase their share price, such as if they need to satisfy exchange listing requirements or want to deter short sellers. A stock split occurs when a company increases the number of its outstanding shares without changing its overall market shares outstanding vs float cap or value. Knowing a company’s number of shares outstanding is key when calculating critical financial metrics and determining share value as a portion of ownership. A public float is the same as free float and refers to the number of a company’s shares that are publicly owned and available for trading by general investors.

• While the number of outstanding shares and the public float may be the same, they don’t have to be, such as in the case of one company owning the shares of another company with no plans to sell them.
• A company’s number of shares outstanding (outstanding shares) is the total number of shares issued and held by stakeholders, both outside investors and insiders.
• Managers and financial analysts use a company’s number of outstanding shares to calculate its earnings per share (EPS).
• The shares available to investors on the open market are commonly called the float.
• XYZ would have to sell 100 shares from its treasury to the warrant holders if all these warrants are activated.
• Additionally, the larger the gap between outstanding shares and the float, the higher the insider ownership stake.

When a company has a high percentage of shares available for public trade, it is considered to have a high float stock. Higher supply in stock leads to more stable movements in share price, making high float stocks a reasonably low-risk investment. Floating stock is the result of subtracting closely held shares from the total shares outstanding to provide a narrower view of a company’s active shares. It is common practice for executives and other employees to receive stock as part of their compensation package. Often used as a performance and longevity incentive, the shares held by employees can be put on what’s known as a vesting schedule so they become available after certain service requirements are met.

The shares companies issue are known as authorized shares, which are the maximum number of shares they are lawfully permitted to make available to investors. The difference between the number of authorized and outstanding shares can be so large that it’s important to realize what they are and which figures the company is using. Different ratios may use the basic number of outstanding shares while others may use the diluted version. This can affect the numbers significantly and possibly change your attitude toward a particular investment. Authorized shares refer to the largest number of shares that a single corporation can issue.