Float in Stocks
Float is the total number of shares available for a publicly traded company. The float is equal to the total number of restricted shares minus the number of outstanding shares.
Why is Float Important
Float by itself does not provide a lot of insight into a company. The real value in the float number comes into play when calculating other market sentiment numbers. For example, the float is used to calculate the days to cover formula, which is used to gauge the bearish tone of a stock.
# of Outstanding Shares - # Restricted Shares = Total Shares in Float
For example, if a stock has 50 million outstanding shares and 25 million are restricted shares, there leaves 25 million stocks to trade in float.