What Are Outstanding Shares?

Denoting the greatest proportion of stocks trading on the exchanges, the float consists of regular shares that many of us will hear or read about in the news. A stock split occurs when a company increases the number of its outstanding shares without changing its overall market cap or value. 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. A company that announces a 2-1 stock split as of a certain date doubles its number of shares outstanding on that date. If that event occurs on, say, December 15th of the year, it can distort the company’s apparent number of shares outstanding for the year.

Example calculation

This is a great example of how share-count reductions can be an important tool for management teams to deliver value to shareholders. When evaluating a company’s stock, it’s important to distinguish between shares outstanding and floating shares, as these figures provide insights into the stock’s liquidity and voting power. Shares outstanding are used to determine a company’s market capitalization, i.e. the total value of total shares outstanding formula a company’s equity, or equity value. Shares outstanding are the basis of several key financial metrics and can be useful for tracking a company’s operating performance. The outstanding shares figure is useful to know for an investor that is contemplating buying shares in a company.

• The number of shares outstanding decreases if the company buys back shares or a reverse stock split is completed.
• A company’s outstanding shares decrease when there is a reverse stock split.
• In the case of Apple, this shows that the company had 15,552,752,000 shares of common stock “issued and outstanding” as of October 20th, 2023.
• Along with individual shareholders, this includes restricted shares that are held by a company’s officers and institutional investors.
• Outstanding shares represent a company’s shares that are held by investors, whether they’re individual, institutional, or insiders.
• These statements are available on companies’ investor relations pages or the SEC website.

Calculating Weighted Average Number of Shares

The number of authorized shares per company is assessed at the company’s creation and can only be increased or decreased through a vote by the shareholders. If at the time of incorporation the documents state that 100 shares are authorized, then only 100 shares can be issued. Outstanding shares are often confused with float and market capitalisation.

• Changes in the number of outstanding shares can affect the stock price by altering supply and demand dynamics.
• While shares outstanding account for company stock that includes restricted shares and blocks of institutional shares, floating stock specifically refers to shares that are available for trading.
• Let’s go through the terms shares and float so that next time you come across them, you will know their significance.
• Total shares outstanding decreased from more than 21 billion in 2016 to less than 17 billion in 2020.
• For blue chip stocks, multiple stock splits over decades contribute to market capitalization growth and investor portfolio expansion.

Authorized Shares

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. The first of these, unrestricted shares, is also known as “the float.” These are the shares that can be actively traded on the open market. Company A has issued 25,800 shares, offered 2,000 shares to two partners, and retained 5,500 stocks in the treasury.

• Furthermore, by identifying the number of restricted shares versus the number of shares in the float, investors can gauge the level of ownership and autonomy that insiders have within the company.
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• After initial public offerings or SPAC (special purpose acquisition company) mergers, pre-existing owners usually have “lock-up” requirements that prohibit selling for a period of time (usually at least 90 days).
• A stock split is an action taken by a company to divide its existing shares into multiple shares.
• As we already explained, shares that can be freely bought and sold by public investors are called the float.

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The shares issued by the company, excluding the ones kept in the company treasury, are called Outstanding Shares. In other online bookkeeping terms, shares held by any market participant (Retailers, HNIs, and Institutional investors) and company insiders are called outstanding shares. Outstanding shares are used to calculate the market capitalization of a company, which is one of the most important parameters while analyzing a company.