How Many Shares Does a Company Have?

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The answer is: It depends. Since there is no restriction for the number of shares within a company, different types of companies can have varying numbers of existing shares: A start-up might only have a few shareholders, while multi-billion dollar companies will usually consist of millions or even billions of shares outstanding.

Deciding on how many shares a company should start with, is primarily build upon how the owners think about the future growth prospects of the company. Therefore, the number of shares is completely determined by the business and its owners.

As soon as you buy shares of stock on the stock market, you become a shareholder within the company by acquiring an ownership stake of the business. All publicly-traded companies have their equity split up into a great number of shares, whereas many of them are constantly switching owners throughout the day. 

Because there is no general answer for the number of shares of all existing companies, you may want to get a better picture of the number of shares that bigger companies usually consist of. 

How Many Shares Does a Company Usually Have?

Some public companies that are considered as low float stocks such as FFD Financial Corp (FFDF) or Amcon Distributing Co (DIT) have less than 1 million shares outstanding. 

Major companies usually consist of much more shares such as Apple (AAPL) with currently 17.1 billion shares outstanding, or Facebook (FB) with 2.4 billion outstanding shares. Companies oftentimes consider increasing their number of shares throughout time by splitting their stock in order to attract more investors.

Here is a list of some well-known companies and their number of shares:

CompanyMarket CapitalizationShares Outstanding
Apple Inc. (AAPL)$2.215T17.11B
Microsoft Corporation (MSFT)$1.749T7.62B
Amazon.com, Inc. (AMZN)$1.609T500.89M
Alphabet Inc. (GOOG)$1.239T733M
Facebook, Inc. (FB)$735.639B2.888B
Berkshire Hathaway Inc. (BRK-B)$535.784B2.382B
GameStop Corp. (GME)$3.655B69.75M

Data as of February 2021 Source: Yahoo Finance, Macrotrends

As already mentioned above, it is completely up to the business to decide the total amount of shares since the primary effects would only be the change in the value of each share and liquidity of the stock.

A great example of why a business might increase the number of shares would be Berkshire Hathaway led by Warren Buffett. Investors of Berkshire have the choice to invest in two different share classes which are called class A and class B shares. With a stock price of over $300,000, Berkshire’s Class A stock is currently considered the most expensive stock in the world.

This is simply due to the fact that since its inception, the company has never gone through a stock split and neither will it likely in the future, as Buffett and his company agreed to rather exclusively offer the stock to more serious and long-term minded investors.

In order to make it possible for regular investors to invest in the company (without paying hundreds of thousands of dollars), Buffett decided to issue Berkshire Hathaway Class B shares, which trade for a fraction of the class A shares. This was only possible by splitting the existing shares into many additional shares, which resulted in the drastically decreased price tag for each share.

Why Do Companies Need to Issue Shares?

Nearly all known companies are publicly traded and available to most people to invest their money and consequently become a shareholder within the business. But why do companies even bother letting everyone become shareholders, and why do companies need to be split up into countless amounts of shares, instead of just relying on a few shares and owners?

Because just like any other business whether being a startup or a trillion-dollar company, in order to grow, there is one primary thing that is required – Capital.

Good to know

  • Generally, businesses have two main ways to finance their growth. Either through debt financing or equity financing. Debt financing includes issuing bonds, or simply borrowing money from private or public sources such as banks and institutions.
    Just like the name implies, debt financing consequently means taking the obligation to pay back the debt including interest payments in the future.

  • A lot of companies and startups prefer to finance themselves by selling parts of the company as stock to investors. This can either happen privately, for instance, when startup owners offer an equity stake to private people or through an IPO, which enables the business to offer their shares to the public for the first time.
    After an IPO, companies still have options to issue additional shares, such as by conducting a follow-on offering.

Instead of making the obligation to pay down debt, companies may rather just sell a fraction of the business in order to obtain the capital needed.

Can Companies Issue as Many Shares as They Want?

So where exactly is the limit? At which point does issuing shares have a negative impact on the business? The main problem with adding additional shares to the pie is that when a company gets split up into more and more shares, each existing share will automatically get diluted, meaning that the value of each share will decrease relative to the number of shares outstanding.

From a technical standpoint, issuing new shares won’t have a direct impact on the numbers of the business as a whole. The money that is raised from the share issue would increase the value of the company.

However, shareholders may suffer from dilution of their held shares, as the value on a per-share level might be reduced. What’s important is how the company will manage the money that has been raised.

Consequently, as an investor, it is very important to pay close attention to what a company actually does with the money that is being raised by additional shares issues. Most companies usually tend to give a clear explanation of why they choose to issue new shares and what they are planning to do with the raised capital.

The stock price of the company will usually go either up or down as a result of the company’s following action. Therefore, when the decisions from the management turn out to be good for the future of the business, investors shouldn’t immediately react with negativity and pessimism to additional share issues.

Conclusion

In the beginning, businesses will require capital to grow. A common way for business owners to raise capital is to offer a part of their business to investors in exchange for their investment. To accomplish that, businesses need to issue additional shares.

Some companies might consist of many more shares than others, and the number of shares may always be changed throughout time.

The increase in the number of shares doesn’t necessarily affect the financials of the company negatively at first but will mainly influence the liquidity of the stock.

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