In the bustling Nigerian market where Mama Ngozi sells her fresh tomatoes, there is something called "free float of shares." Now, let's break this down in plain and simple language so Mama Ngozi and everyone else can truly understand.Imagine that a big company decides to sell its shares to raise monRead more
In the bustling Nigerian market where Mama Ngozi sells her fresh tomatoes, there is something called “free float of shares.” Now, let’s break this down in plain and simple language so Mama Ngozi and everyone else can truly understand.
Imagine that a big company decides to sell its shares to raise money for expansion, just like how Mama Ngozi sells her juicy tomatoes to earn income for her family. These shares are divided into different parts, with some being held tightly by the company’s owners and insiders. The remaining portion that is available for the public to buy and sell on the Nigerian Exchange Group (NGX) is what we call the “free float of shares.”
So, the free float represents the shares that are not held by the company’s management, directors, or other strategic investors. These shares are freely traded among everyday investors like you and me, making the stock market more liquid and accessible to everyone.
When you hear about the “free float of shares,” it simply refers to the portion of a company’s stock that is traded on the market, which helps determine its market value and allows investors to buy and sell them easily.
In essence, the free float of shares creates opportunities for ordinary Nigerians to own a piece of successful companies and benefit from their growth while contributing to the dynamism of the stock market.
So, next time you hear about free float of shares, remember Mama Ngozi in the market and how everyone can participate in the exciting world of stocks.
Free float simply means the number of a company’s shares that are actually available for the public to buy and sell on the stock market. For example, imagine Company ABC has 1 million shares in total. The founder owns 400,000 shares and intends to keep them. The government or a strategic investor owRead more
Free float simply means the number of a company’s shares that are actually available for the public to buy and sell on the stock market.
For example, imagine Company ABC has 1 million shares in total.
The founder owns 400,000 shares and intends to keep them. The government or a strategic investor owns another 300,000 shares and does not actively trade them. That leaves only 300,000 shares available for ordinary investors to buy and sell.
So:
Total shares = 1,000,000
Shares available to the public = 300,000
Free float = 30%
Why does this matter?
A company with a small free float may have fewer shares available for trading. This can affect liquidity, meaning it may be harder to buy or sell large quantities without significantly affecting the share price.
For example, if only 10% of a company’s shares are available to the public and many investors suddenly want to buy, demand can push the price up quickly because there aren’t many shares available.
So when looking at a Nigerian stock, don’t only look at the share price. Free float can also tell you something about how much of the company is actually available for public trading.
In the bustling Nigerian market where Mama Ngozi sells her fresh tomatoes, there is something called "free float of shares." Now, let's break this down in plain and simple language so Mama Ngozi and everyone else can truly understand.Imagine that a big company decides to sell its shares to raise monRead more
In the bustling Nigerian market where Mama Ngozi sells her fresh tomatoes, there is something called “free float of shares.” Now, let’s break this down in plain and simple language so Mama Ngozi and everyone else can truly understand.
Imagine that a big company decides to sell its shares to raise money for expansion, just like how Mama Ngozi sells her juicy tomatoes to earn income for her family. These shares are divided into different parts, with some being held tightly by the company’s owners and insiders. The remaining portion that is available for the public to buy and sell on the Nigerian Exchange Group (NGX) is what we call the “free float of shares.”
So, the free float represents the shares that are not held by the company’s management, directors, or other strategic investors. These shares are freely traded among everyday investors like you and me, making the stock market more liquid and accessible to everyone.
When you hear about the “free float of shares,” it simply refers to the portion of a company’s stock that is traded on the market, which helps determine its market value and allows investors to buy and sell them easily.
In essence, the free float of shares creates opportunities for ordinary Nigerians to own a piece of successful companies and benefit from their growth while contributing to the dynamism of the stock market.
So, next time you hear about free float of shares, remember Mama Ngozi in the market and how everyone can participate in the exciting world of stocks.
See lessFree float simply means the number of a company’s shares that are actually available for the public to buy and sell on the stock market. For example, imagine Company ABC has 1 million shares in total. The founder owns 400,000 shares and intends to keep them. The government or a strategic investor owRead more
Free float simply means the number of a company’s shares that are actually available for the public to buy and sell on the stock market.
For example, imagine Company ABC has 1 million shares in total.
The founder owns 400,000 shares and intends to keep them. The government or a strategic investor owns another 300,000 shares and does not actively trade them. That leaves only 300,000 shares available for ordinary investors to buy and sell.
So:
Total shares = 1,000,000
Shares available to the public = 300,000
Free float = 30%
Why does this matter?
A company with a small free float may have fewer shares available for trading. This can affect liquidity, meaning it may be harder to buy or sell large quantities without significantly affecting the share price.
For example, if only 10% of a company’s shares are available to the public and many investors suddenly want to buy, demand can push the price up quickly because there aren’t many shares available.
So when looking at a Nigerian stock, don’t only look at the share price. Free float can also tell you something about how much of the company is actually available for public trading.
See less