The percentage range for a low float stock is typically considered to be between 10% and 20% of the total shares outstanding12. For example, a company with 50 million shares outstanding and a low float of 10 million shares would have a low float percentage of 20%. However, the exact percentage range for a low float stock can vary depending on the company and the industry.
- High Float vs. Low Float:
- High Float: Companies with a large number of shares available for trading, such as Bank of America with a float of over 9 billion shares, are considered to have a high float2.
- Low Float: A low float stock typically has a float between 10% to 20% of the total shares outstanding. For instance, a company with 50 million shares outstanding and a low float of 10 million shares would have a low float percentage of 20%12.
- Factors Influencing Float:
- Restricted and Closely-Held Shares: The float is calculated by subtracting restricted shares (typically held by insiders) and closely-held shares (owned by employees, major shareholders) from the total shares outstanding3.
- Share Buybacks: Share buybacks can decrease the number of outstanding shares, which in turn increases the float as a percentage of outstanding shares3.
- Implications of Low Float:
- Volatility and Liquidity: Low float stocks are generally more volatile and have wider bid-ask spreads due to the smaller number of shares available for trading41.
- Institutional Investment: Institutional investors often prefer high float stocks for easier trading and less impact on share prices with large purchases5.
Understanding the percentage range for a low float stock can help investors assess the liquidity and potential volatility of a stock before making investment decisions.
7/26/2024 12:36am
