At the time, GE discussed plans to split into three companies and to divest from many businesses. They determined that reducing their share count from contribution margin nearly 8.8 billion to roughly 1.1 billion better aligned with this vision (1). You can find shares outstanding at the top of a company’s 10-Q or 10-K filing.

• The number of shares outstanding changes over time, sometimes dramatically, which can impact the calculation for a reporting period.
• The term “float” refers to the number of shares available to be traded by the public and excludes any shares held by company executives or the company’s treasury.
• It can split its stock to reward its current investors and to make its price per share more tempting to new investors.
• Learn about stocks that will split in 2024 and why a company might decide to do a stock split.
• Shares outstanding and weighted average shares are both numbers that can help an investor understand how well a company performs over time.

Implications of a Stock Split

When a company executes a stock split, the number of outstanding shares rises. Stock splits are often initiated to lower the share price, making it more accessible to retail investors and enhancing market liquidity. For example, in a 2-for-1 stock split, the share price is halved, but the outstanding shares double, improving affordability and attracting a broader investor base. So far, we’ve focused on shares outstanding, whether basic or diluted, at a fixed point in time. In SEC filings, companies will report the total number of shares outstanding on a given day, but in their quarterly and annual figures they must also offer the weighted average shares outstanding. Those instruments can be “in the money” if the exercise price — the price designated for the stock by the option or warrant — is below the stock’s trading price.

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Companies typically use reverse splits to increase their share price to meet minimum exchange listing requirements. Although this decreases liquidity due to fewer shares, it can deter short total shares outstanding formula sellers by making it harder to borrow shares for short selling. The weighted average shares outstanding figure smooths out this variance, by simply averaging the share count across the reporting period.

Shares Outstanding Vs. Float and Free Float Vs. Shares Outstanding

The same is true for convertible debt, which allows holders to either be repaid in cash or convert the debt into equity at a pre-set per-share price. And if these instruments are in the money, they represent current ownership of the company, even if technically the shares underlying the options, warrants or debt haven’t yet been issued. From the previous example, we know that this company has 1,000 authorized shares.

Shares Outstanding in Financial Metrics

• Changes in shares outstanding over time also reveal how valuable shares are as a stake of ownership in the company, as the number of shares available directly affects this.
• It is a less-commonly used number in the financial reporting of privately-held businesses.
• 600 shares are issued as floating shares to the general public, 200 are issued as restricted shares to company insiders, and 200 are kept in the company’s treasury.
• This value changes depending on whether the company wishes to repurchase shares from the market or sell out more of its authorized shares from within its treasury.
• However, there are still some ways you can figure out share counts as an exercise to confirm your understanding of how the company is capitalized.

A significant change in outstanding shares, such as through a stock buyback or issuance, can signal strategic shifts and impact investor sentiment. The number of shares outstanding for a company is equal to the number of shares issued minus the number of shares held in the company’s treasury. If a company buys back its own stock, those repurchased shares are called treasury stock.

• It’s worth noting that a company’s basic number of shares outstanding can differ from its fully diluted number of shares.
• Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts.
• For many companies, however, even those executing buybacks, the number of outstanding shares and the number of issued shares is the same.
• The float, also called the free float or the public float, represents the subset of shares outstanding that are actually available to trade.
• Outstanding shares are often confused with float and market capitalisation.

Understanding outstanding shares

Many of the financial ratios used in the fundamental analysis include terms like outstanding shares and the float. Let’s go through the terms shares and float so that next time you come across them, you will know their significance. Several factors can cause a company’s number of outstanding shares to rise or fall, with one of the most common being stock splits. Outstanding shares equation differ from issued (Authorized) as authorized shares are the number of shares a corporation is legally allowed to issue. In contrast, outstanding stocks are the ones already issued in the market.

Outstanding Shares Definition and How to Locate the Number

But the concept of outstanding shares is a bit more complicated than it seems. The number of shares outstanding changes over time, sometimes dramatically, which can impact the calculation for a reporting period. At any given point, instruments like warrants and stock options must be accounted for as well. The number of shares outstanding for a publicly-traded company is reported in its periodic filings with the Securities and Exchange Commission (SEC), particularly in the annual report known as Form 10-K. These documents provide not just the raw number of shares but also a context for understanding changes over time due to corporate actions such as stock splits, buybacks, or issuance of new shares.