Definition
Float refers to the number of shares available for public trading, calculated by subtracting restricted shares (held by insiders, employees under lock-up, etc.) from total shares outstanding. Low float stocks can experience significant price swings because limited available shares mean even modest buying or selling pressure creates larger price movements. Float is important for understanding liquidity, volatility potential, and short squeeze probability. Institutional ownership can further reduce effective float.
Formula
Example
A company with 100 million shares outstanding but only 20 million float (80% held by insiders) could see 30% price swings on average volume days. High short interest on low-float stocks creates extreme squeeze potential.
FAQ
What is Float?
The number of shares available for public trading.
How do you calculate Float?
A common formula for Float is: Float = Shares Outstanding - Restricted Shares - Insider Holdings
Why is Float important?
Float helps investors evaluate trading mechanics and make more informed decisions.