what is floating stock 
floating stock is the number of shares available for trading of a particular stock low float stocks are those with a low number of shares floating stock is calculated by subtracting closely held shares and restricted stock from a firm s total outstanding shares closely held shares are those owned by insiders major shareholders and employees restricted stock refers to insider shares that cannot be traded because of a temporary restriction such as the lock up period after an initial public offering ipo a stock with a small float will generally be more volatile than a stock with a large float this is because with fewer shares available it may be harder to find a buyer or seller this results in larger spreads and often lower volume understanding floating stocka company may have a large number of shares outstanding but limited floating stock for example assume a company has 50 million shares outstanding of that 50 million shares large institutions own 35 million shares management and insiders own 5 million and the employee stock ownership plan esop holds 2 million shares floating stock is therefore only 8 million shares 50 million shares minus 42 million shares or 16 of the outstanding shares the amount of a company s floating stock may rise or fall over time this can occur for a variety of reasons for example a company may sell additional shares to raise more capital which then increases the floating stock if restricted or closely held shares become available then the floating stock will also increase on the flip side if a company decides to implement a share buyback then the number of outstanding shares will decrease in this case the floating shares as a percentage of outstanding stock will also go down a stock split will increase floating shares while a reverse stock split decreases float 