Written by The Content Team | Published on August 14, 2018

Every publicly traded company issues shares. Some of these shares are available for trading, while others are subject to restrictions. Shares outstanding refers to the total number of shares a company has issued, while the public float — also referred to as floating shares or the float — are shares that are publicly owned, unrestricted and available on the open market. These two numbers, often listed in a detailed quote for a security, are usually different. Heres why.

Shares Outstanding

This number includes all the existing shares of a company — those held by individual investors and institutional groups, plus any restricted shares that are held by company insiders such as employees and executives. The number of shares issued is decided upon before the initial public offering, or IPO, but can change over time if the companys board of directors decides to issue additional shares or execute a share buyback. The number of outstanding shares is used to calculate key metrics about a company, including its market capitalization.

What Are Restricted Shares?

It is common practice for executives and other employees to receive stock as part of their compensation package. Often used as a performance and longevity incentive, the shares held by employees can be put on whats known as a vesting schedule so they become available after certain service requirements are met. For example, an employee might receive a certain number of shares after every two years of service or after hitting a specific performance marker. This system is designed to encourage employee loyalty, as the individuals compensation is directly tied to the companys stock performance. These shares are considered part of the shares outstanding, but because they arent available for everyday trading, theyre not considered part of a companys public float.

Public Float

A companys float are the shares are available for trading on any given day — in other words, shares outstanding minus any restricted shares.

For example, lets say Company ABC has 1 million shares outstanding and 750,000 floating shares. This would mean that one-quarter (the difference between the two) of the companys stock is held by employees and company insiders and is subject to selling restrictions. When you view a companys stock quote in the financial media or on your trading platform, youll often see both numbers listed in the quote details.

Keep in Mind

The larger the gap between outstanding shares and the public float, the higher the employee ownership stake. Does this mean higher growth potential because employees are dedicated to increasing the stock price? Or does it mean that decision-making power is placed in the hands of fewer investors within the company? Maybe one, maybe neither. Its important not to make generalizations based on one data point. While the number of shares outstanding compared to floating shares doesnt reveal anything specifically about the growth potential of a company, there are a few things to keep in mind when reviewing these numbers.

  • If the public float is well below the shares outstanding, it means a high proportion of the company is employee-owned
  • If the public float is well below the shares outstanding, the stock price has the potential to be volatile as there are fewer shares trading at any given time; a larger public float can mean less volatility
  • If the number of floating shares is very close to the shares outstanding, it means there is little employee ownership in the company

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RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2018. All rights reserved.

The views and opinions expressed in this publication are for your general interest and do not necessarily reflect the views and opinions of RBC Direct Investing. Furthermore, the products, services and securities referred to in this publication are only available in Canada and other jurisdictions where they may be legally offered for sale. If you are not currently resident of Canada, you should not access the information available on the RBC Direct Investing website.


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