In some nations such as the United States, these figures are accessible from the Securities and Exchange Commission (SEC) quarterly filings. The outstanding shares of a company can fluctuate for a number of reasons. The number of these shares will increase if the company issues additional shares. Typically, companies issue shares when raising capital through equity financing or upon exercising employee stock options (ESO), or other financial instruments. On the other hand, outstanding shares will decrease if the company buys back its shares under a share repurchase program. Not to be confused with authorized shares, outstanding shares refer to the number of stocks that a company has issued.

The formula for determining the outstanding shares is the number of shares outstanding x current share price. This section provides the sum of the total authorized shares, the total number of shares outstanding, and the total floating shares. The weighted average of outstanding shares is a calculation that incorporates any changes in the number of a company’s outstanding shares over a reporting period. The reporting period usually coincides with a company’s quarterly or annual reports. The weighted average is a significant number because companies use it to calculate key financial measures with greater accuracy, such as earnings per share (EPS) for the time period.

Add the Preferred and Common Stock, Then Subtract the Treasury Shares

A buyback announcement usually gives stocks a boost because traders tend to view buybacks as bullish catalysts. This tells you how much of that stock was issued but not how much there currently is. Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.

To issue more shares, the company would have to first increase the number of authorized shares. This includes preferred, common, and restricted shares but excludes shares owned by the company. To calculate the weighted average cost per share, the investor can multiply the number of shares acquired at each price by that price, add those values, and then divide the total value by the total number of shares. Among investors, it is most relevant to those who compile a position in a stock over a long period of time, buying on the dips and holding the shares. XYZ then buys back 100,000 shares at $10 per share, spending $1 million of its cash reserves. If the net income remains at $1 million, the new EPS would be approximately $1.11 ($1 million / 900,000 shares).

Reverse Stock Split

While the lower number of outstanding shares often hampers liquidity, it could also deter short sellers since it becomes more difficult to borrow shares for short sales. If there exists a difference between the number of shares issued and outstanding shares, the difference is treasury stock. In shares outstanding formula other words, the company issued some shares to investors and then bought back some of the shares. This in turn leaves a reduction in the number of shares that is currently outstanding. Look at the line item for common stock, this is the main class of stock that is being issued to investors.

In addition to the stocks they issue to investors and executives, many companies offer stock options and warrants. These are instruments that give the holder a right to purchase more stock from the company’s treasury. Every time one of these instruments is activated, the float and shares outstanding increase while the number of treasury stocks decreases.

How to calculate outstanding shares

The simplest way to obtain the shares outstanding is to look directly on the first page, right before the table of contents. In the case of Apple, this shows that the company had 15,552,752,000 shares of common stock “issued and outstanding” as of October 20th, 2023. Now, imagine you are one of the shareholders in XYZ that did not sell their shares as part of the buyback program. From your perspective, you now own a larger percentage of the company, since the total number of shares outstanding has declined. Since EPS increased, it is likely that the market value increased as well (although in the real world this is not guaranteed). And since you did not actually receive any dividends, you do not need to pay any taxes even though your wealth increased as a result of the higher share price.

Note that this method does not account for shares that can be potentially released through various mechanisms, so a weighted average shares outstanding will not tell you the diluted EPS. When you look a little closer at the quotes for a company’s stock, there may be some obscure terms you’ve never encountered. For instance, restricted shares refer to a company’s issued stock that cannot be bought or sold without special permission by the SEC.

It includes shares held by the general public and restricted shares that are owned by company officers and insiders. The outstanding shares figure is useful to know for an investor that is contemplating buying shares in a company. Dividing the number of shares to be purchased by the number of shares outstanding reveals the percentage of ownership that the investor will have in the business after the shares have been purchased.

• As we already explained, shares that can be freely bought and sold by public investors are called the float.
• Outstanding shares can also be used to calculate some key financial metrics, including a company’s market cap and its earnings per share.
• Conversely, they decrease if the company buys back some of its issued shares through a share repurchase program.
• It can issue a new round of stock in order to raise money for expansion.
• They are not included in the balance and increasing them will always bring about decreases and vice-versa.

It is shown as part of the owner’s equity on the liability side of the balance sheet, under the heading, “Capital Stock”. Next, you’ll want to look for the common stock line item on the company’s balance sheet. Common stock is the main class of stock that the company issues to investors.