Definition of Stock Float
What is a Stock Float?
The "float" represents the shares in a publicly traded company that are available for trading by the general public.
To arrive at the number of shares that make up the "float" in a company, we use this simple calculation:
Shares Outstanding Minus Restricted Shares = Float
For instance, let's look at Microsoft.
Microsoft currently has 8.98 billion shares outstanding.
There are 1.27 billion restricted shares in Microsoft.
If we subtract 8.98 billion shares outstanding by 1.27 billion restricted shares, we are left with a float of 7.71 billion shares.
Why is the Stock Float Important?
Companies with smaller floats tend to be much more volatile compared to companies with larger floats.
Microsoft has 7.71 billion shares in its float. ASYS has 7.26 million shares in its float. Which company do you think will be susceptible to larger volatility and more violent moves? ASYS, because there are less shares available to the public. If ASYS releases a strong piece of news, the shares will likely trade violently higher due to a smaller float.
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