Public Float

Key Highlights

• Public Float refers to the shares of a company that are available for trading by the general public on a stock exchange.

• It excludes shares held by insiders, such as company executives, directors, and major shareholders who are not likely to trade their stock frequently.

What is Public Float?

Public Float refers to the shares of a company that are available for trading by the general public on a stock exchange. It excludes shares held by insiders, such as company executives, directors, and major shareholders who are not likely to trade their stock frequently.

Purpose

Public float shows:

• How much of a company’s stock is actively available for buying and selling

• The real supply of shares that can affect stock price movements

• Investor interest and market liquidity for a stock

How It Works?

• Total outstanding shares include all shares issued by the company.

• From this total, shares owned by insiders, governments, or locked-in investors are subtracted.

• The remaining shares are called the public float.

Formula:

Public Float = Total Outstanding Shares – Restricted Shares (owned by insiders)

Importance in the Stock Market

1. Higher public float usually means better liquidity and less price volatility.

2. Lower public float can make a stock more volatile, as even small buying or selling can cause big price swings.

3. It helps investors assess the stock’s tradability.

Pros

• Easier trading and better liquidity (for stocks with a large float)

• Helps ensure fair market pricing

• Shows how "available" the company’s stock truly is

Cons

• Stocks with a small float can be highly volatile

• Low float stocks are more prone to price manipulation