What is Low Float stocks?🤔

Low float stocks refer to shares of a company that are available for trading by the general public. To understand this, let's take ABC Pvt Ltd as an example.

In total, ABC Pvt Ltd has 100,000 shares. Out of these:

1. 20,000 shares are owned by the company's founder.

2. 30,000 shares are held by senior employees and management.

3. The remaining 50,000 shares are traded on the stock market, which means regular investors can buy or sell them.

These 50,000 shares that are open for public trading are called "float shares." When a company has a relatively small portion of its total shares available for public trading, it is referred to as a "low float" stock.

Whether low float stocks are good or bad isn't a one-size-fits-all answer. Some investors are cautious about low float stocks because they can experience significant price fluctuations due to limited supply and demand. However, a low float can also suggest that the company's founder and employees have confidence in its future, as they are holding onto a significant portion of the shares.

In summary, low float stocks have a small percentage of their total shares available for trading, which can make their prices more volatile. Investors consider both the risks and potential advantages when deciding whether to invest in such companies.