Free float
The proportion of a company's shares actually available to trade, excluding stakes held by founders, governments, or long-term strategic holders.
Example
A company with 196 million shares of which insiders hold 60% has a free float of about 78 million shares.
Important
A thin float means a given order moves the price further in both directions, and it means the headline market capitalisation rests on an even smaller pool of willing counterparties.
Related terms
- Market capitalisation — The last traded share price multiplied by the total number of shares outstanding - the market's headline figure for the value of a company's equity.
- Liquidity — How quickly and cheaply an asset can be converted to cash without moving its own price.
- Shares outstanding — The number of shares a company has issued and that are currently held by investors. The diluted figure adds shares that would exist if outstanding options and convertible instruments were exercised.
- Order book — The live, price-ranked list of all resting buy and sell orders for a security, showing how many shares are available at each level on each side.
Lessons that explain it
All 578 terms in the Investing glossary