Free float意思

"Free float" or "float" is a term used in finance and accounting, and it refers to the number of shares of a company that are available for trading in the open market. These shares are not held in treasury by the company, nor are they owned by insiders such as company officers, directors, or significant shareholders.

The float is an important concept in stock trading because it affects the liquidity of a stock. Liquidity refers to the ease with which an asset can be bought or sold without affecting its price. Stocks with a large float tend to have higher liquidity because there is a larger supply of shares available for trading, which means that investors can buy or sell these shares more easily without moving the market significantly.

The float is typically calculated by subtracting the number of restricted shares (such as those held by insiders or held as treasury stock) from the total number of outstanding shares. For example, if a company has 10 million outstanding shares, but 1 million of those shares are held by insiders and 1 million are held as treasury stock, then the float would be 8 million shares.

Investors often prefer to buy stocks with a large float because it means they can enter and exit positions more easily, and they are less likely to face problems with illiquidity, which can lead to wider bid-ask spreads and difficulty in selling shares when needed.