In finance, the term “free float” refers to a company’s total outstanding shares less its restricted shares. A company’s free float is used to determine its free float market capitalization, which includes only the value of stocks traded on the open market.
A company’s entire market capitalization, including restricted stocks, is referred to as its “float”. As a general rule, the higher a stock’s free float, the less volatile the stock is. The higher the portion of equities made up of restricted stocks, the more volatile the stock is.