What is Float?
Free Float is the number of shares available for public trading, excluding shares held by insiders, promoters, and locked-up shares. It represents the shares that can actually be bought and sold in the market.
Think of it like this
Imagine a parking lot with 1000 spaces (total shares). But 400 are reserved for employees and VIPs (restricted shares). Only 600 spaces are available to the public (free float). Low availability means it's harder to find parking!
Formula
Free Float = Total Shares - Restricted Shares (insider holdings, locked shares)- Total Shares: Shares outstanding
- Restricted Shares: Insider holdings, locked shares
Why it matters
- Shows shares actually available for trading
- Low float means higher volatility potential
- Affects liquidity and price stability
- Important for institutional investors
What's a good value?
< 20M
Low Float
High volatility potential, can gap easily
20M-100M
Medium Float
Moderate liquidity
100M-500M
Good Float
Good liquidity for most investors
> 500M
High Float
Excellent liquidity, institutional-friendly
Real-world example
GameStop 2021: ~50M float with massive buying pressure = squeeze. Apple: 15B+ float = very liquid, hard to manipulate. Small IPOs often have 10-30M float initially, then more unlocks after 6-12 months.
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