The total number of a company’s shares of stock that are currently owned by all shareholders, including those held by institutional investors and company insiders.
What are Outstanding Shares?
Outstanding shares refer to all shares of a corporation that have been issued and are held by shareholders, whether they are individuals, institutional investors, or company executives. This number includes shares that are freely traded on the open market as well as restricted shares that may be held by insiders under certain limitations.
The number of outstanding shares is important because it is used to calculate key financial metrics such as market capitalization, earnings per share (EPS), and ownership percentages. For example, dividing the company’s total market value by its number of outstanding shares gives its share price, and dividing net income by outstanding shares gives the EPS.
Outstanding shares can change over time due to events like stock buybacks, issuance of new shares, stock splits, or conversions of preferred stock or convertible securities.
For non-U.S. founders with U.S. corporations, understanding outstanding shares is critical for managing equity, structuring investment deals, and tracking ownership dilution when issuing new stock. This figure is typically listed in the company’s annual reports, filings with the U.S. Securities and Exchange Commission (SEC), or corporate records.
In essence, outstanding shares represent the total equity currently in the hands of shareholders and form the foundation for determining a corporation’s valuation and shareholder ownership structure.
