$69 postpage LB

What Is Float?

  • December 29, 2018 01:30 PM AEDT
  • Team Kalkine
What Is Float?

Float refers to the number of company’s shares that are open for trading on the stock exchange. That is to say, the quantity of the stock that is publicly available for investors to trade in.

Gold MTF non-AMP

How to derive float?

Yes, you must be wondering how to identify the company’s float. It is based on the simple calculation in which closely-held shares plus restricted stock of the company are deducted from the company’s total number of shares outstanding.

In simple words, we can say float excludes all the shares that are held by the company’s management, owners, employees or are otherwise restricted to be traded under the lock-in period. On technical fronts, closely-held shares comprise of the number of shares held by the company’s director, management, owners as a part of their compensation package or under Share purchase Plan among others. It also includes shares held by the employees of the company generally under the Employee Stock Option Plan (ESOP). Whereas coming to the restricted stock of the company, we can say any number of shares that are restricted to be traded publicly or have limitation for sales like in the case of escrow are referred as restricted securities.

To get rid of all the confusion, let's take a practical example! Suppose, a company’s total outstanding shares are 50,000, but 5,000 shares are held by management, 2000 shares have been distributed as ESOPs, and 15,000 shares are under escrow account.

Then, in such a case, the company’s float would come to 28,000, [50,000-(5,000+2,000+15,000)] i.e., [Total Outstanding stock- (Closely-held shares + restricted stock)].

Should you bother about the company’s float volume?

Of course! Every investor needs to know the company’s float volume as it has a direct impact on the volatility of the stock’s price. In general, the size of a company’s float and the volatility in its stock price have an inverse relationship. That means if the small number of company’s share is free to be traded on the stock exchange, there will be higher price volatility but to the contrary, if the company has a large number of shares available for trade, there will be a little impact on the change in stock price. It’s a simple weighted average method, reflecting the control of each share on its price movement.

Further, with any change in insiders trading, there will be a direct effect on the company’s float. But the on-market trade which includes buying, selling and shorting does not cast any change in the float as these reflect the mere trading actions representing the redistribution or change of shares ownership.


This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.



The website https://kalkinemedia.com/au is a service of Kalkine Media Pty. Ltd. (Kalkine Media) A.C.N. 629 651 672. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.


We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK