Floating shares

Floating Supply

The number of shares of a publicly-traded company available to trade. It is important to note that this may be different from the shares outstanding: some shareholders may buy and hold, reducing the size of the float. The size of a floating supply greatly affects a stock's volatility. If it is small, any number of activities could affect greatly its price, especially a single large order to buy or sell it. This would greatly alter the number of shares available to trade, creating too little or too much supply and, therefore, drive the price up or down. A large floating supply tends to have less volatility because large orders do not affect the supply as much. It is also called a float. See also: Technical condition of a market.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Floating shares.

Floating shares are shares of a public corporation that are available for trading in a stock market.

The number of floating shares may be smaller than the company's outstanding shares if founding partners, other groups with a controlling interest, or the company's pension fund, employee stock ownership plan (ESOP), or similar programs hold shares in their portfolios that they aren't interested in selling.

Some equity index providers, including Standard & Poor's, use floating shares rather than outstanding shares in calculating their market-capitalization weighted indexes on the grounds that a float-adjusted index is a more accurate reflection of market value.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.