Free float
Free float refers to the percentage of a company's total voting shares that are freely traded and could therefore be held by anyone.
Free float refers to the percentage of a company's total voting shares that are freely traded and could therefore be held by anyone. Affiliated firms, directors, or even the government typically own the rest. So if a company has issued 100,000 voting shares, but 60,000 are held by the government and another 30,000 by its directors, the 'free float' is just 10%.
This can have odd consequences. For example, sudden demand for the few shares that "free float" can have a disproportionate effect on a firm's estimated market value, which is usually based on its voting shares. If the share price jumps from £2 to £10, the firm's value goes from £200,000 to £1,000,000, even though relatively few shares have been traded.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
1,000 children hold over £100,000 in a junior ISA – how to grow tax-free nest egg for your child
Junior ISAs can be a tax-efficient way to grow a nest egg for your child. We explain how they work
-
How to start investing: a beginner’s guide
Getting started in investing is a great way to make your money work harder for you over the long term, as investments tend to outperform cash savings