freefloatadjusted

freefloatadjusted is a term used in finance, particularly in the context of stock market analysis and company valuations. It refers to the number of shares of a company that are actually available for trading by the public, excluding shares that are held by insiders, controlling shareholders, or are otherwise restricted from trading. This adjusted share count is considered more representative of the liquid float available to investors.

When calculating a company's market capitalization, which is the total value of all its outstanding shares, analysts often use the free float adjusted number of shares. This provides a more accurate picture of the company's market value as it removes shares that are unlikely to be traded on the open market. For example, shares held by founders, executives, or strategic investors might be subject to lock-up periods or other restrictions, meaning they are not part of the freely tradable supply.

The concept of free float adjusted shares is also important for index inclusion. Many stock market indices, such as the S&P 500 or the FTSE 100, use free float adjusted market capitalization as a primary factor in determining which companies are included and their weighting within the index. This ensures that the index accurately reflects the performance of the investable universe of shares. Changes in a company's free float, such as through secondary offerings or share buybacks by insiders, can impact its eligibility for and weighting in these indices.