Float and Shares Outstanding

Shares outstanding is every share the company has issued and not bought back, including stock held by founders, employees under restriction, and strategic holders who are not selling. It is the number used to compute market capitalizationMarket capitalizationShare price multiplied by shares outstanding - the market's price for the whole company.Read the full explanation and earnings per shareEarnings per shareNet income divided by shares, the per-share slice of profit.Read the full explanation.

The public float subtracts the shares that cannot realistically be traded: insider holdings subject to restriction, stock held by affiliates, and blocks locked up after a listing. What remains is what the market can actually pass between hands on any given day.

For a mature large-cap the two numbers are close, because founders sold down years ago and there is no lock-up left. For a company two quarters past its listing they can differ by a factor of five, and every conclusion drawn from the wrong one will be wrong in proportion.

Price is set at the margin, by whoever is willing to trade right now. When the tradable supply is small, an ordinary amount of buying has to reach much further up the order bookOrder bookThe live list of resting buy and sell limit orders at each price for a security.Read the full explanation to find sellers, and the same demand that would move a mega cap a fraction of a percent moves a small-float name several percent.

This cuts both ways and is symmetric. The same thinness that produces violent advances produces violent declines, and the exits are just as narrow as the entrances. A position that took three days to build can take considerably longer than three days to leave, because the buyers who were present on the way up are not obliged to be there on the way down.

• Lock-up expiry: after a listing, insider stock becomes sellable on a scheduled date, often expanding the float sharply.
• A secondary offeringSecondary offeringA sale of additional shares by a company that is already public, usually to raise cash.Read the full explanation or an at-the-market offeringAt-the-market offeringA registered facility letting a company drip new shares into the open market over time.Read the full explanation: new shares are sold into the market, raising both counts.
• Buybacks: repurchased stock reduces shares outstanding and usually float with it.
• Insider sales: shares moving from restricted hands into public ones enlarge the float without issuing anything new.
• Conversions: warrants, convertible notes and employee awards turn into ordinary shares on their own schedules.
• Index inclusion: does not change the float, but changes who owns it and how much of it is effectively immobile.

Each of these is disclosed in a filing before or shortly after it happens. The registration statements and the insider forms are the primary record, which is why the filings pillar sits alongside this one: the float is a fact about a company that only the filings can tell you accurately.

The most reliable way to track it from the outside is the cover page of each 10-QForm 10-QThe unaudited quarterly report, filed for the first three quarters of a fiscal year.Read the full explanation and 10-KForm 10-KThe audited annual report, including the business description, risk factors and full statements.Read the full explanation, which states shares outstanding as of a recent date. Lining up four consecutive covers shows the trajectory in about a minute.

Short interest measured against shares outstanding understates crowding, sometimes badly. Measured against float it answers the question that matters: what proportion of the genuinely tradable supply has already been borrowed and sold.

A stock with fifteen percent short interest against outstanding and a float that is a third of outstanding has forty-five percent of its tradable supply sold short. Those are very different situations described by the same headline number, and only the second framing explains why such a security can behave the way it does.

Float is shares outstanding less the shares not available to trade. There is no single authoritative definition of the second half, so published float figures differ between providers.

• Restricted shares held by insiders, which cannot be sold freely.
• Large strategic holdings, where a corporate holder is not a trading participant.
• Government holdings, in companies that were privatised or rescued.
• Shares held by an employee ownership plan, depending on the provider's treatment.

Index providers publish their own float-adjusted figures, and those are the ones that determine index weights. A company whose founder holds forty percent has a float weight well below its full capitalisation, which affects how much index-driven demand its shares receive.