Floats

[Kuzami]

What is generally considered a low float (number-wise) for a stock?

[lovemoney]

Good question! I've seen low float stock lists that require a stock to have a float of 10 milion or less to qualify for the list. However, I see people posting stocks on the board and talking about how this stock or that has a low float of 20 or 30 million. Get's kind of confusing sometimes. I guess it's all relative, but to what I'm not sure. :o Generally, based on what I've seen alot of penny stocks posted as, I would consider a low float to be under 20 million or so I guess.

Maybe the experts coulld chime inon this one.

[daiello]

I think low float all depends on the company.

I mean, 5 million share float, but the pps is 10$. Thats already a market cap of AT LEAST 50,000,000$

But a float of 200 million shares on a pps of .0001, i consider that a low float, because the market cap is then AT LEAST 20,000$

Thats my opinion.

[PennyPicker]

Originally Posted by daiello

I think low float all depends on the company.

I mean, 5 million share float, but the pps is 10$. Thats already a market cap of AT LEAST 50,000,000$

But a float of 200 million shares on a pps of .0001, i consider that a low float, because the market cap is then AT LEAST 20,000$

Thats my opinion.

thank you mr. obvious

[daiello]

Well, if you read the first post Ryo, you will see that he was wondering what is considered a low float, number wise.

I told him that basically there is no "rule" for a stock to be a low floater, and depends mostly on the pps and market cap.

[lovemoney]

daiello, could you maybe elaborate on how the PPs and market cap enter into determining what is considerd a low float?

In other words, it's understood in general that the lower number of shares available for a particular company being traded are gonna cause the stock price to move quicker and more drastically on news etc, but how does different market cap and PPS levels affect that?

This is good info for us beginners that a book of simple definitions may not necessarily address.. Thanks.

[PennyPicker]

Originally Posted by lovemoney

daiello, could you maybe elaborate on how the PPs and market cap enter into determining what is considerd a low float?

In other words, it's understood in general that the lower number of shares available for a particular company being traded are gonna cause the stock price to move quicker and more drastically on news etc, but how does different market cap and PPS levels affect that?

This is good info for us beginners that a book of simple definitions may not necessarily address.. Thanks.

market cap and PPS levels affect that because let's say company A has a float of 5million at $10.00 per share that would make the market cap worth $50,000,000

whereas company B has a float of 200million at 0.001 per share that would make the market cap for company B $200,000

Now let's say you have $20,000 if you spend that on Company A's share you would only own a small fraction of the company whereas if you spend it on Company B you would own 10% of the company. Therefore company B is a lot more volatile.

Market Capitalization - The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

[daiello]

Originally Posted by lovemoney

daiello, could you maybe elaborate on how the PPs and market cap enter into determining what is considerd a low float?

In other words, it's understood in general that the lower number of shares available for a particular company being traded are gonna cause the stock price to move quicker and more drastically on news etc, but how does different market cap and PPS levels affect that?

This is good info for us beginners that a book of simple definitions may not necessarily address.. Thanks.

The newbie's response is pretty good.

I will elaborate on his a little more.

Company A has 5,000,000 shares in the float, and a 10$ price per share
Company B has 200,000,000 shares in the float, and a .0001 price per share

Just for a quick example, to own Company B's float it is 20,000$. Now im not willing to sell at .0001, so if someone wants this i want .0003 for it. The people that bought it at .0003, want .0005.

With less shares available not every price is going to be available to buyers, so you either keep your price at what you want, or you buy at the ask. With this being said, for that same 20,000$ you bought all of company B's float with, you can only buy 2,000 shares of company A which is less than 1%, making it harder to move due to more shareholders.

Does that help? It is hard to explain haha.

[lovemoney]

Good explanations guys! Thanks. Sounds like the bottom line, is how big a chunk of the company float you end up owning for the money you spend. And that gives you more pricing power when time to sell.

[lovemoney]

Another question. How does the difference in the float vs the total oustanding shares enter into this equation? When you say that a float of X number of shares multiplied by the current PPS gives you a market cap of 'at least' $XXX.., considering that the actual market cap could be higher depending on the actual number of outstanding shares (options, warrants etc included) as opposed to just the float, what difference is the market cap going to make? I can see how the PPS will determine what % of the float I own as a a trader, assuming the float doesn't increase due to dillution. But why should the 'actual' market cap matter, being that market cap is calculated by multiplying O/S and PPS and not the float multiplied by the PPS? At least that's my understanding.:o

If we say that company B has a float of 200 million at 0.001 per share which would make the market cap for company B $200,000 and that $20,000 spent on shares of Company B's float would give you ownership of 10% of the company, is that really accurate if the outstanding shares (which include unactivated options and warrants) were say maybe 250 million? Wouldn't the market cap then actually be 250,000 which would give my $20,000 only an 8 % ownership in the company?

In other words wouldn't the number of shares in the float (freely traded shares) and PPS be my only concern for trading purposes since the float may only account for a portion of the total market cap calculation? (ie: The float could only be a small, medium or large portion of the total outstanding shares)

Just trying to get a clear understanding. Thanks again.