Shares outstanding

This is the total number of shares issued by the company held by investors. This figure would be the divisor when determining per share price from the company's market value. In our quote, ADM has a market cap of about 22.8 billion dollars. When you divide that market cap with the number of tradable shares, we get our share price which is $35.46. Suppose that Archer Daniels Midland (ADM) has less shares outstanding, if the price of the stock remains at $35.46 and its shares outstanding is cut in half to 322 million, its market value would just be around 11 billion. Companies with less outstanding shares tend to have stocks trading at a higher price than companies who issued out more, even with relative market values. For example, we got two companies valued at $1,000,000. Company A and company B both have 100,000 shares outstanding, so the price of their stock would be $10 a share. (1 million divided by 100,000 = 10). Noting that these are two equal companies with stocks trading at the same value, company B decides to make its stock look cheaper than that of company A's. They increased the number of tradable shares through a 2 for 1 stock split. Doubling its shares outstanding to 200,000 shares, its stock is now worth $5 per share (1 million divided by 200,000 = 5) making it more attractive to some investors since they can rake in more shares.

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