Floating Stock vs Shares Outstanding: What Is the Difference?

Less well-known companies usually have low shares outstanding vs float floats and are more likely to have dramatic price fluctuations as a result of some type of news catalyst. Whether a stock’s float percentage is good or bad depends on the type of investor. Learn everything you need to know about sell to open versus sell to close in this options trading guide.

• Floating shares are the number of outstanding shares excluding closely-held shares by company insiders and controlling investors.
• The larger the gap between outstanding shares and the public float, the higher the employee ownership stake.
• This category includes already-issued stock along with shares that have the management’s approval but have not, yet, been released onto the trading market—including stock options.
• If you use any data provider to make investment decisions, be sure to note which method it uses.
• Outstanding shares are a fundamental component of the stock market.
• The number of outstanding shares can fluctuate in other ways as well.

Outstanding shares include those held by stakeholders and company insiders; floating shares refer to the number of shares available to be traded. The number of outstanding shares is calculated by subtracting treasury stock from the shares issued. Generally, you won’t need to calculate this number yourself and it will be listed for you on a company’s 10-Q or 10-K filing.

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Some of these shares are available for trading, while others are subject to restrictions. These two numbers, often listed in a detailed quote for a security, are usually different. Outstanding shares are all the shares issued and sold by a company that are not held by the company itself. Outstanding shares include a company’s common stock held by individual investors, institutional investors and restricted shares held by company officers and insiders.

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• Imagine ABC Ltd has 50,000 shares outstanding, from which significant corporations hold 15,000, and some other business, QPR Ltd, acquires 3,000.
• As we continue to unravel more trading terminology in this series, you’ll find that the market isn’t so cryptic after all—it’s just another language waiting to be learned.
• Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
• She received a bachelor’s degree in business administration from the University of South Florida.
• James has been writing business and finance related topics for work.chron, bizfluent.com, smallbusiness.chron.com and e-commerce websites since 2007.

Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. It’s good to pay attention to this number when you’re looking at smaller companies, since stocks with small floats (referred to as “thinly traded”) can be extra volatile. Any demand will send the stock price soaring, since supply is so limited, and vice versa. I was in high school and had been investing in stocks for a while with money earned from mowing lawns and other activities. Believing I was on the cusp of making the next great internet fortune, I started buying shares of Xoom, a provider of free websites and clip art (not the digital money transfer business acquired by PayPal).

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However, the float provides a view into potential market volatility and liquidity. 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. A stock split occurs when a company increases its shares outstanding without changing its market cap or value. Companies can also undergo reverse stock splits or consolidate shares.

Shares Outstanding vs Float: Why Know the Difference?

This information is not intended to be used as the sole basis of any investment decision, should it be construed as advice designed to meet the investment needs of any particular investor. Reverse splits and share buybacks decrease the number of shares outstanding. Stock splits and dilutions increase the number of outstanding shares. You can usually find the number of shares outstanding in the stock details section of your charting software. The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site.

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Shares outstanding is just the amount of all the company’s stock that’s in the hands of its stockholders. The material provided on the Incorporated.Zone’s website is for general information purposes only. It is not intended to provide legal advice or opinions of any kind.

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For instance, if a firm has two million outstanding shares and you possess 200,000, you own 10% of it. It’s also worth mentioning that the outstanding shares often determine the share price of a corporation. The significant distinction between outstanding shares and floats is that floats are among two factors contained in the number of shares outstanding.

While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Direct Investing Inc. or its affiliates. You should consult with your advisor before taking any action based upon the information contained in this document. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site.

Alternatively, a float is the number of shares accessible for public trade. The Float is vital to understand since it shows the number of shares actively traded on a stock exchange. On the other hand, floating stock comprises shares issued solely by public firms listed on any of the stock markets. When a company is first formed, its incorporation documents authorize the issuance of a certain number of shares of stock.