Public float, in the context of stock trading, refers to the portion of a company’s outstanding shares that is publicly owned and available for trading in the stock market. This excludes shares held by insiders such as company executives, large institutional investors, or other entities that own substantial amounts of stock for long-term investment.
In other words, public float is the number of shares a company has issued that are available to be bought and sold by the general investing public. It’s an important concept to understand because the size of the public float can affect a stock’s liquidity and volatility.
For example, a smaller public float can lead to higher volatility because there are fewer shares available for trading. This could cause the stock’s price to move more drastically, up or down, with a single trade. On the other hand, a larger public float typically means more liquidity, making it easier for investors to buy or sell shares without affecting the stock’s price excessively.
