These existing securities, tradable on the market (i.e., on the stock exchange), are generally held by the public, institutional investors, and company executives and employees.
Each share represents an ownership claim on the company, giving its holder a legal claim on the profits it generates, proportional to the size of their stake in the capital.
Added together, they are also used to calculate the company's market capitalization by multiplying their number by their unit price. This yields the 'price' the market assigns to the company, provided one does not take its indebtedness into account.
See on this subject ABC of financial analysis: market capitalization vs. enterprise value.
The number of shares outstanding is a critical variable in the fundamental analysis of a company's long-term economic performance. It is therefore essential to always cross-check its evolution with that of revenue and profits.
Indeed, for example, over a given period, if the company doubles its profit but also doubles its number of shares outstanding after a capital increase, value creation for shareholders is zero: the cake has doubled in size, but so has the number of slices.
To take a major French name, this scenario is striking at Veolia: if the share price in 2025 is at the same level as twenty years ago while profit has almost doubled in the meantime, it is because the number of shares outstanding has also increased by 87%.
Conversely, and still by way of example, a company that doubles its profit but at the same time halves its number of shares outstanding via sustained buybacks quadruples value creation for its shareholders.
