Open any financial news article and you'll see "issued" and "outstanding" used as if they mean the same thing. They don't. The difference is small but it's the most common reason a float calculation lands on the wrong number — which is the most common reason a reverse-split trade goes wrong.
Here are the four share-count terms you need to know, ranked from biggest to smallest.
Authorized shares
The maximum number of shares the company is legally allowed to ever create. This number is written into the company's articles of incorporation. Increasing it requires a shareholder vote.
Think of it as the ceiling. A company with 200 million authorized shares cannot create the 200,000,001st share without going back to shareholders for permission.
Issued shares
Of those authorized shares, the ones the company has actually created and distributed. Issued shares include shares held by:
- Public shareholders (you and other investors)
- Insiders (executives, directors, founders)
- Treasury (shares the company bought back but hasn't retired)
- Employee stock pools, grant pools, anything with a name on it
If 50 million shares are issued, the company has put 50 million shares into existence at some point in its history.
Outstanding shares
Issued shares minus treasury shares. These are the shares actually owned by somebody outside the company itself. This is the number you'll see on most financial data sites and the number used to calculate market cap (price × outstanding).
Issued and outstanding are usually close. Outstanding is always less than or equal to issued. If a company has never done a buyback, they may even be equal.
But — and this is the trap — they can drift apart silently. A company that quietly buys back 5% of its shares has the same issued count and a lower outstanding count. If you're looking at an old filing, you might be using a stale issued number when you should be using a fresh outstanding number.
Issued tells you what was created. Outstanding tells you what's in somebody's account. Float tells you what can actually trade.
Float (free float)
Outstanding shares minus restricted shares. Restricted shares include:
- Insider holdings still under lock-up restrictions
- Founder shares not yet released by SEC Rule 144
- Recently-granted employee shares still in vesting cliffs
- Large institutional holdings legally classified as not freely tradeable
Float is what's actually available to trade in the open market. It's the number that determines how easy or hard it is to move the price. And it's usually a fraction of outstanding — sometimes a small fraction.
Why this matters for reverse splits
A reverse split affects every one of these numbers. A 1:20 split divides authorized, issued, outstanding, restricted, and float all by 20 — at least on paper.
But the practical effect is uneven. The insider lockups and institutional positions usually don't change ownership through the split — they get the same proportional treatment. What changes is how much of the now-smaller pool is truly available to be bought and sold.
Here's the math problem most retail traders make:
- They look up "outstanding shares" on a free finance site
- They divide by the split ratio
- They call that the post-split float
- They size their trade accordingly
Wrong number. The post-split float is dramatically smaller — sometimes 5×–10× smaller — than the post-split outstanding count. The trader who skips this distinction sizes too big, gets surprised by the move, and either misses the trade or gets crushed.
Where each number lives in the filings
- Authorized: 10-K Item 5, or the Articles of Incorporation exhibit attached to a DEF 14A
- Issued: 10-K and 10-Q balance sheet notes
- Outstanding: Cover page of the most recent 10-K or 10-Q ("Indicate the number of shares outstanding")
- Float: No single filing reports this directly — you build it yourself from outstanding minus restricted minus institutional lockups, using Form 4 (insider transactions) and 13F (institutional ownership) data
The Float Calculator walks you through the subtraction. Tier 1 Module 2 walks you through finding each of those numbers in the actual filings, with screenshots.
The short version
Issued ≥ outstanding ≥ float. Always. The bigger the gap between outstanding and float, the bigger the price-impact potential of a reverse split. Knowing which number to use and where to find it is the difference between a calculated trade and a coin flip.