Glossary
Shares Outstanding
The total number of shares a company has issued and that are currently held by all of its owners combined.
It is the other half of market cap. A share price on its own says nothing about how big a company is, because the price depends entirely on how many pieces the company was cut into. Multiplying the price by the shares outstanding is what produces a value for the whole business.
The number changes over time. It grows when a company issues new shares, whether to raise money or to pay employees in stock, and each new share dilutes the claim every existing share has on the same profits. It shrinks when the company repurchases its own shares, which is what a buyback does.
Two versions get quoted and they are not interchangeable. Basic shares outstanding counts what exists today; diluted counts what would exist if everything convertible into shares, employee options for instance, were converted. Earnings per share is usually reported on the diluted count, which is the more conservative of the two.
Learn this properly
Lesson 8: What is Market Capitalization?Market capitalization tells you the total value of a company. Here's what it means, why it matters, and how to use it when evaluating stocks.
Related terms
- Market Cap (Market Capitalization)What the whole company is worth at today's share price: the price per share multiplied by the number of shares.
- EPS (Earnings Per Share)A company's profit divided by the number of shares it has, so profit is expressed per slice of ownership.
- BuybackA company using its own cash to purchase its own shares on the open market, reducing the number outstanding.
- FloatThe number of a company's shares actually available to trade, once restricted and closely held stock is excluded.
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