Free Float
Free float is the number of a company's shares available for public trading, excluding shares held by insiders, governments or under restrictions. Low-float stocks can move sharply because few shares are available to trade.
A company may have 100 million shares outstanding, but if founders and insiders hold 70 million, only 30 million actually trade. That tradable portion is the free float. It affects liquidity, volatility and even how much weight a stock gets in indexes. This entry explains how float is calculated and why it matters.
- Category
- Fundamentals and Macroeconomics
- Reading time
- 3 min
- Also called
- Public float, Float, Floating stock
- Updated
Free float in plain words
Free float, or public float, is the shares that can be publicly traded and aren't restricted, such as those held by insiders.1
It is calculated as shares outstanding minus restricted shares.1
Float is the number of outstanding shares available for trading by the public, excluding insiders and restricted stock.2
How to work out free float, step by step
Start with shares outstanding
All issued shares held by investors. See Shares Outstanding.
Subtract insider holdings
Founders, executives, directors.
Subtract restricted shares
Locked-up or unregistered. See Restricted Securities.
Subtract strategic stakes
Governments or parent companies.
Result is free float
Shares the public can trade.
Compare with volume
Turnover vs float. See Volume.
Worked examples
Example 1 — Calculating float
50m shares100m shares outstanding; insiders hold 40m; 10m are restricted.
| Free float | 100m − 40m − 10m = 50m |
| Float % | 50% |
Free float is the shares outstanding minus restricted holdings.1
Example 2 — Float-adjusted index weight
B weighs moreCompany A: $100bn market cap, 50% float. Company B: $80bn, 100% float.
| A float-adjusted | $50bn |
| B float-adjusted | $80bn |
Many indexes weight by float, so B gets the larger weight despite a smaller market cap. See Index Weighting.
Example 3 — Low-float spike
Extreme volatilityA stock has only 5m shares of float; daily volume jumps to 10m on news.
| Turnover | 2× the float in a day |
With few shares available, heavy demand can cause extreme price moves. See Short Squeeze.
Free float vs shares outstanding
| Aspect | Free float | Shares outstanding |
|---|---|---|
| Includes insiders | No | Yes |
| Includes restricted | No | Yes |
| Used for | Liquidity, index weights | Market cap, EPS |
| Always smaller or equal | Yes | — |
Why float matters
Liquidity
Bigger float, easier trading. See Liquidity.
Index weights
Float-adjusted indexes. See Stock Market Index.
Short squeezes
Short interest vs float. See Short Interest.
IPO lock-ups
Float grows when lock-ups expire. See Initial Public Offering.
Advantages and disadvantages
Advantages
- Shows real tradable supply.
- Better liquidity measure than shares outstanding.
- Used by major indexes.
Disadvantages
- Data definitions vary by provider.
- Changes with insider sales and lock-ups.
- Low float increases manipulation risk.
Going deeper
Read as far as you need. Each level builds on the one before it.
Secondary market supply
Beginner
Free float describes how many shares are available to the public in the secondary market.1 See Primary and Secondary Market.
Volatility link
Intermediate
A stock's volatility tends to move inversely with its float — smaller floats often mean bigger swings.2
Short interest as % of float
Advanced
Short interest is often quoted as a share of float; very high readings can fuel squeezes. See Short Squeeze.
Common mistakes
Using shares outstanding for liquidity
Float is the tradable part.
Ignoring lock-up expiries
New supply can hit the price.
Chasing low-float hype
Small floats are easy to move. See Pump and Dump.
Mixing data sources
Float estimates differ.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Free float is the publicly tradable share count.
- It excludes insiders and restricted shares.
- Low float can mean high volatility.
- Many indexes weight by float.
- Float changes with lock-ups and insider sales.
Frequently asked questions
What is a low-float stock?
Does float change?
Is float the same as market cap?
Further learning
- Short Interest
Often measured against float.
- Liquidity
How easily shares trade.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- Corporate Finance Institute. Free Float (opens in a new tab) Checked .
- Nasdaq. Float (glossary) (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.