Outstanding Shares - Definition, Formula, Types

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In this video, we will study the definition, types of Outstanding Shares and its impact on investors.

𝐖𝐡𝐚𝐭 𝐚𝐫𝐞 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬(𝐬𝐭𝐨𝐜𝐤𝐬)?
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Outstanding shares are shares owned by shareholders, officials of the firm and public investors, including retail investors, institutional investors and insiders.

𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬 𝐯𝐬 𝐀𝐮𝐭𝐡𝐨𝐫𝐢𝐳𝐞𝐝 𝐒𝐡𝐚𝐫𝐞𝐬
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Outstanding shares differ from authorized shares (issued shares), since authorized stocks are the amount of stock that a company is legally entitled to issue, while outstanding shares are already issued on the market.

𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Outstanding Shares Formula = Issued Stock - Treasury Stock

𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬
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There are 2 types of stocks outstanding

#1 - Basic Share Outstanding
#2 - Fully Diluted Share Outstanding

𝐁𝐚𝐬𝐢𝐜 𝐒𝐡𝐚𝐫𝐞 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠
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Basic shares mean the number of presently outstanding stocks.

𝐅𝐮𝐥𝐥𝐲 𝐃𝐢𝐥𝐮𝐭𝐞𝐝 𝐒𝐡𝐚𝐫𝐞 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠
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The fully diluted number of outstanding shares informs you how many outstanding stocks there might be.

𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬 𝐨𝐧 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬
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#1 - A higher number of outstanding shares ensures more secure company with a higher price flexibility, as many more traded stocks are required to create a significant change in the stock price.

#2 - A number of outstanding stocks is an important concern for all shareholders, as they are included in the newest market valuation and earnings per share.

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