Share outstanding is the total number of company shares which currently hold by investors in the capital market and private shareholder. We usually find the number of shares outstanding in the company’s financial statement.
The outstanding share excludes the number of shares in which the company buys back from investors and retires them. It also excludes the unissued shares which the company plans to release in the future.
Outstanding Share vs Authorized Share
Authorized share is the number of shares which company allows to issue by the regulator. In another word, they are the share which company plan to issue in the future. It is the maximum number of shares.
Opposite from outstanding share which is the number of shares already issue and still active in the market.
How does share outstanding change?
Share outstanding will increase when the company sells a new share to raise more funds for new investment. Stock split also increase the number of shares, it is the way that company increases the current number of share with a certain multiplier.
The number of shares outstanding can decrease when the company decides to buy back the share from the market. Board of a director may decide to buy back some share to increase the ownership as the company generate good profit and have surplus cash. Moreover, the company may reverse the stock split by combining the outstanding stock with a curtain divider.
How does share outstanding affect investors?
A high number of outstanding shares represent a huge number of trading in the market. It shows that there are many shareholders out there holding the shares which are not easy to manipulate the share price. So it is considered safe than the company’s shares belong to a small group of people.