Public float

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Public float or free float represents the portion of shares of a corporation that are in the hands of public investors as opposed to locked-in stock held by promoters, company officers, controlling-interest investors, or government. This number is sometimes seen as a better way of calculating market capitalization because it provides a more accurate reflection rather than the entire market capitalization.[1]

In this context, the float may refer to the entire market capitalization of the company or all the shares outstanding that can be publicly traded.[2]

Calculating public float[edit]

The float is calculated by subtracting the locked-in shares from outstanding shares. For example, a company may have 10 million outstanding shares, with only 7 million of them trading on the stock market; this company's float would be 7 million. Stocks with smaller floats tend to be more volatile than those with larger floats. In general, the large holdings of founding shareholders, corporate cross-holdings, and government holdings in partially privatized companies are excluded when calculating the size of a public float.

See also[edit]

References[edit]

  1. ^ "Free-Float Methodology". investopedia. Retrieved June 17, 2013. 
  2. ^ Investorwords definition

External links[edit]