What is Float?
Float (erkin muomala)
In short
The number of shares freely tradable by the public, excluding insider and restricted holdings.
Also known as: free float
Float is the number of shares available for free trading on the open market. It is found by taking a company's shares outstanding and removing those held by insiders (founders, executives), strategic investors and holders under sale restrictions (for example, a post-IPO lock-up).
Formula
Float = Shares outstanding − Insider and restricted shares
Why float matters
- Volatility. With a small float there are few shares available to trade — when demand rises the price can jump sharply and fall just as fast. "Low float" stocks are known for big daily moves, and for high risk.
- Short interest. Shares sold short are often measured as a percentage of float. A small float combined with high short interest can lead to violent moves.
- Indexes. Many indexes weight a company by float-adjusted capitalisation rather than full market cap.
- Float changes. A lock-up expiry, new share issuance (dilution) or a buyback increases or reduces float.
Float rotation
Comparing daily volume with float is useful too: when volume exceeds the float, interest in the stock is extremely high — often a sign of speculative activity.
Example
A fictional company:
- Shares outstanding: 100,000,000.
- Held by founders and executives: 30,000,000.
- Restricted shares under lock-up: 10,000,000.
- Float: 100 − 30 − 10 = 60,000,000 shares.
At a $20 share price: full market cap is $20 × 100M = $2B, while float-adjusted it is $20 × 60M = $1.2B.
Another example: a float of just 5,000,000 shares and short interest of 1,500,000 → 1.5 ÷ 5 = 30% of float. If 10,000,000 shares trade in a day, the float has turned over twice (10 ÷ 5 = 2×).
Mistakes and tips
Size smaller in low-float stocks: a sharp rise can be followed by an equally sharp fall.
After an IPO, watch the lock-up expiry date — the float can suddenly grow and weigh on the price.
Float data varies by source and updates with a lag — treat it as an estimate, not an exact figure.
Frequently asked questions
- What is the difference between float and shares outstanding?
- Shares outstanding are all issued shares held by investors. Float is what remains after subtracting insider and restricted shares.
- What is a low-float stock?
- A stock with very few freely tradable shares. Even modest demand moves the price sharply, so these stocks rise fast and fall fast.
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