What Are Outstanding Shares?

Outstanding shares include share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders. A company’s number of outstanding shares is not static and may fluctuate wildly over time. The profit and loss statements in nearly every corporate earnings press release will include both basic and diluted shares outstanding. A company’s outstanding shares, the total shares held by shareholders excluding treasury stock, can fluctuate due to various factors. Notably, stock splits and reverse stock splits significantly influence the number of outstanding shares. A stock split occurs when a company increases its shares outstanding without changing its market cap or value.

• The information is also available on stock data websites like Stock Analysis.
• At any given point, instruments like warrants and stock options must be accounted for as well.
• Generally, both of these figures can be found on a company’s balance sheet.
• Floating shares serve as a good representation of the company’s active shares or share turnover among various investors in the market, excluding parties holding substantial portions of equity.

What is the difference between authorized shares and outstanding shares?

XYZ would have to sell 100 shares from its treasury to the warrant holders if all these warrants are activated. Exercising all the warrants would change the numbers to 450 and 550 respectively and the float would increase to 300 in our example where the number of outstanding shares is 350 and treasury shares total 650. Knowing a company’s number of shares outstanding is key when calculating critical financial metrics and determining share value as a portion of ownership. Outstanding shares are the aggregate number of shares that a corporation has issued to investors.

In other terms, shares held by any market participant (Retailers, HNIs, and Institutional investors) and company insiders are called outstanding shares. Outstanding shares are used to calculate the market capitalization of a company, which is one of the most important parameters while analyzing a company. The number of shares of common stock outstanding is a metric that tells us how many shares of a company are currently owned by investors. This can often be found in a company’s financial statements, but is not always readily available — rather, you may see terms like “issued shares” and “treasury shares” instead. Besides, it can be helpful to understand where the numbers you’re looking at came from. The number of shares outstanding increases whenever a company undertakes a stock split.

As restricted shares become unrestricted, insiders can sell them into the market for a profit. It can change if the company does a forward or reverse stock split, a share buyback, secondary offering, or financing. It includes shares held by insiders, institutions, regular investors, and the shares that get freely traded each day. Basic shares are the number of outstanding stocks currently outstanding, however, fully diluted shares outstanding tells you how many outstanding shares there could potentially be. These factors directly impact outstanding shares, influencing investment decisions. Understanding how to calculate outstanding shares is crucial for investors, financial analysts, and anyone involved in the stock market.

Here’s what you need to know about the different share counts that publicly traded companies use, as well as how to calculate shares outstanding how you can calculate the number of outstanding common shares. The purpose of the repurchase can also be to eliminate the shareholder dilution that will occur from future ESOs or equity grants. While outstanding shares are a determinant of a stock’s liquidity, the latter is largely dependent on its share float.

Navigating the Calculations

Different scenarios for calculating the weighted average of outstanding shares are shown in the following examples. Another metric calculated using shares outstanding is the price-to-book (P/B) ratio. However, due to the fluctuations in share counts between reporting periods, the figure is typically expressed as a weighted average.

Can Outstanding Shares Change Over Time?

These shares are not considered outstanding because they are not held by public or institutional investors. In certain cases, notably for companies that are aggressively issuing shares or debt, public data should be augmented with a reading of SEC filings. But for mature companies with relatively little movement in share count (either basic or diluted), quarterly and annual data from public sources should easily suffice for solid fundamental analysis. While Revenue Per Share (RPS) is a valuable financial metric, it does come with certain limitations that investors should be aware of when analyzing a company’s financial health. Understanding these limitations ensures that RPS is used in the right context and alongside other financial indicators for a more comprehensive analysis.

Companies typically issue shares when they raise capital through an equity financing, or upon exercising employee stock options (ESO) or other financial instruments. Outstanding shares will decrease if the company buys back its shares under a share repurchase program. Let us consider an example of a company named KLX Inc. in order to illustrate the computation of shares outstanding.

Companies that have publicly traded stocks in the United States are required to file public financial disclosures to the Securities and Exchange Commission (SEC) which include the company’s balance sheet. You can also find the company’s balance sheet in its annual report, which can often be found on the company’s website. At any moment in time, a corporation has a specific number of shares that it has authorized for sale, to individual or institutional investors. Outstanding shares are the total number of common stocks owned by investors. Outstanding shares are the number of shares used to determine a company’s market cap and its earnings per share (EPS). Since I only hold my positions for a few minutes or hours, I don’t care about a company’s earnings or any of its financials.