Shares Outstanding
What Does "Shares Outstanding" Mean?
In the world of finance, the phrase "shares outstanding" is utilized to allude to a company's all's issued shares of stock that are not held in the company's treasury. This incorporates shares held by the public as well as those held by institutional investors and company insiders.
All outstanding shares are remembered for the calculation of certain important metrics like market capitalization (number of shares outstanding * current share price) and [earnings per share](/essential earnings-per-share) (net income after dividend payments/shares outstanding).
The most effective method to Calculate Outstanding Shares
To work out shares outstanding, a company would deduct the number of shares held in its treasury by the total number of shares it has issued.
Outstanding Shares Formula
Shares Outstanding = Issued Shares - Treasury Shares
Shares Outstanding versus Float: What's the Difference?
While shares outstanding incorporates a company's all's issued shares, float just incorporates those accessible for public trading. At the end of the day, the float contains all shares that are not somehow or another locked up or restricted (e.g., held by institutional investors or insiders who are not yet permitted to trade). Float can be calculated by taking away the number of restricted shares from the total number of shares outstanding.
Stock Float Formula
Stock Float = Shares Outstanding - Restricted Shares
Where Can You Find Out How Many Outstanding Shares a Company Has?
Companies report their shares outstanding to the Securities and Exchange Commission (SEC) four times each year in their quarterly and annual filings, which are accessible on the Commission's website. Outstanding shares are additionally listed on companies' balance sheets, and many companies remember this data for their websites also.
How Do Splits, Reverse Splits, and Buybacks Affect Outstanding Shares?
Three occasions that can definitely modify the number of outstanding shares a company has are splits, reverse splits, and buybacks.
Splits
Sometimes, companies "split" their stock to increase the number of shares outstanding and bring down the stock's price. This can happen when a company's shares have become costly and they need to make them more affordable so they are more interesting to retail traders that don't have that much capital. A 2:1 stock split would double the number of shares outstanding and bring down a stock's price by half. Essentially, a 3:1 split would triple the number of shares outstanding and bring down a stock's price by 66%. In each case, the company's total market value continues as before.
Reverse Splits
On the other hand, a company could conduct a reverse split to reduce the number of shares outstanding and increase stock price. A few stock exchanges (like the Nasdaq) require all stocks to trade over a certain price to stay listed, so a company whose stock has fallen below an exchange's threshold could start a reverse split to support stock price and stay listed. Reverse splits work like splits however the other way. A company reduces the total number of shares outstanding and increases stock price likewise. Similarly as with splits, market cap continues as before.
Buybacks
At last, a company could repurchase shares of its stock from the open market and afterward lock them up in the company treasury. This reduces the number of shares outstanding and frequently decidedly affects share value due to the diminished supply.
Features
- These incorporate share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.
- Shares outstanding allude to a company's stock currently held by the entirety of its shareholders.
- A company's number of shares outstanding isn't static and may vacillate ridiculously over the long haul.
FAQ
What Is the Difference Between Shares Outstanding and Floating Stock?
While shares outstanding account for company stock that incorporates restricted shares and blocks of institutional shares, floating stock explicitly alludes to shares that are accessible for trading. Floating stock is calculated by taking outstanding shares and deducting restricted shares. Restricted stock are shares that are owned by company insiders, employees and key shareholders that are under brief restriction, and consequently can't be traded.
How Do Stock Splits Impact Shares Outstanding?
Regularly, a stock split happens when a company is intending to reduce the price of its shares. At the point when this happens, a company's outstanding shares increase, and a higher degree of liquidity results. Conversely, a reverse stock split happens when a company tries to raise its share price. Frequently, a company does this to meet listing requirements, which frequently require a base share price.
What Are Shares Outstanding?
Shares outstanding are the stock that is held by a company's shareholders on the open market. Alongside individual shareholders, this incorporates restricted shares that are held by a company's officers and institutional investors. On a company balance sheet, they are indicated as capital stock.
