Often, a company does this to meet listing requirements, which often require a minimum share price. A stock’s total outstanding shares help determine its liquidity, or how rapidly shares of that stock can be bought or sold without substantially impacting the price. The number of shares a company has available to trade in the open market is known as its float.

Outstanding Shares Definition and How to Locate the Number

In the US, public companies are obligated to report their number of shares outstanding as part of the SEC’s filing requirements. Authorized shares are the maximum number of shares a company can issue, as specified in its corporate charter. Outstanding shares are the shares that have been issued and are currently held by investors. Whether potential shares are considered anti-dilutive depends on the period. Company A might post a loss in the first quarter, and report a diluted share count of 100 million — but post a profit for the year, with a diluted share count more than twice as high.

• Companies issue different types of shares of equity, the largest and most common type being common shares.
• The number of shares outstanding can (and usually does) fluctuate over time.
• While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service.
• Authorized shares represent the third share-number metric that investors often look at to get a comprehensive overview of a company’s stock shares.
• The reason for that is that most public companies have instruments that provide for shares to be issued in the future.
• Authorized shares, meanwhile, are the maximum number of shares a company can issue, based on its corporate charter.

Calculating Weighted Average Number of Shares

Investors use outstanding shares to gauge a company’s size and compare it with peers. A significant change in outstanding shares, such as through a stock buyback or issuance, can signal strategic shifts and impact investor sentiment. But the concept of outstanding shares is a bit more complicated than it seems. The number of shares outstanding changes over time, sometimes dramatically, which can impact the calculation for a reporting period. At any given point, instruments like warrants and stock options must be accounted for as well. It’s worth noting that a company’s basic number of shares outstanding can differ from its fully diluted number of shares.

Outstanding Shares vs. Treasury Shares

Stock splits are often initiated to lower the share price, making it more accessible to retail investors and enhancing market liquidity. For example, in a 2-for-1 stock split, the share price is halved, but the outstanding shares double, improving affordability and attracting a broader investor base. Those instruments can be “in the money” if the exercise price — the price designated for the stock by the option or warrant — is below the stock’s trading price. The same is true for convertible debt, which allows holders to either be repaid in cash or convert the debt into equity at a pre-set per-share price.

What Is the Difference Between Shares Outstanding and Floating Stock?

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, when shares outstanding are going up, shares outstanding formula the ownership stake of shareholders is diluted. And when shares are bought back, investors end up owning more of the company. If the float suddenly shoots up, though, it could mean that company insiders or institutional investors lack confidence in the stock or are not completely committed to managing its price. A company’s stock float does not include closely-held shares that are held by company insiders or controlling investors.

• The number of outstanding shares affects several key financial metrics and ratios, including earnings per share (EPS) and price-to-earnings (P/E) ratio.
• Treasury shares are the portion of shares that a company keeps in its own treasury.
• Often, a company does this to meet listing requirements, which often require a minimum share price.
• It also may coincide with the conversion of stock options awarded to company outsiders into stock shares.
• Dilution occurs when a company issues additional shares, reducing current investors’ proportional ownership in the company.

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. The number of shares outstanding can impact how liquid a stock is, which in turn often affects the volatility of its price. The seven billion floating shares are the shares considered for the free float, market capitalization index weightings. That’s because the vast majority of its shares are available to the general investing public.

Shares outstanding vs float

• Shares outstanding (or outstanding shares) are any shares that are held by shareholders and company insiders.
• Preferred shareholders also have priority over common shareholders if the company goes bankrupt and its assets are liquidated.
• Investors use outstanding shares to gauge a company’s size and compare it with peers.
• These are the maximum number of shares that a corporation is legally permitted to issue.
• Authorized shares refer to the largest number of shares that a single corporation can issue.
• The fully diluted number of shares indicates how many outstanding shares there could potentially be if all existing equity instruments were converted into common stock.
• A company’s public float is often expressed as a figure or a percentage of the company’s total outstanding shares.

An additional metric used alongside shares outstanding is a company’s “float,” which refers to the shares available for investors to buy and sell on the open market. A company’s float is an important number for investors because it indicates how many shares are actually available to be bought and sold by the general investing public. As such, index providers such as S&P and others are market leaders in setting a precedent for calculating floating stock methodologies. Public companies are required to report their number of shares outstanding in their quarterly and annual disclosures to the Securities & Exchange Commission.

Issued Vs. Outstanding Vs. Authorized

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. The number of shares outstanding consists of shares held by institutions, restricted shares held by company insiders, and shares available for investors to buy and sell on the open market. Investors can look at any number of metrics to make their investment decisions. When it comes to stocks, a company’s outstanding and floating unearned revenue 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.

Investors may choose to use weighted averages if they have compiled a position in a particular stock over a period. Given continuously changing stock prices, the investor will calculate a weighted average of the share price paid for the shares. It includes shares held by the general public and restricted shares that are owned by company officers and insiders. Shares outstanding and weighted average shares are both numbers that can help an investor understand how well a company performs over time. https://www.bookstime.com/ P/B is often used to value companies in the financial sector (i.e. banks) and is calculated by taking a company’s share price and dividing it by the book value per share. For example, the price-to-earnings (P/E) ratio calculates how much investors are paying for $1 of a company’s earnings by dividing the company’s share price by its EPS.