Shares of publicly traded companies are generally always available for purchase, but how many shares can be bought at a given price depends on multiple factors such as company size and the share ownership structure.
NYSE Specialists and NASDAQ Market Makers
The New York Stock Exchange (NYSE) has a system of specialists whose job is to maintain orderly markets in specific stocks assigned to them. Although not required to, NASDAQ market makers (MMs) effectively do the same thing by maintaining markets in specific stocks. Specialists and MMs trade for their own accounts and always have shares in their inventory available for sale at a small profit. If they run out of shares, they can always borrow them from other investors to sell to a buyer.
The larger the company, the more shares it has outstanding, which are shares that are issued and in the hands of investors. For example, General Electric stock routinely trades tens of millions of shares daily – enough for most buyers to get all the stock they want. Conversely, shares of small companies are available in smaller quantities and may be more difficult to buy in sufficient quantity at a specified price.
Share Ownership Structure
The availability of shares depends on who owns them. Shares owned by investors are generally always available for purchase because investors are always willing to sell if the price is right. However, shares owned by company insiders such as founders, top management, directors and key employees may or may not be available for sale because insiders may be more inclined to hold them long-term or are restricted from selling them.
Wall Street is in the business of selling shares to investors when there is demand for them. If shares of a stock are in demand, brokers can always talk the current owners into selling or arrange for the company to issue more shares.
Share Availability vs. Price
In a market economy anything is available for the right price. If an investor wants to buy X number of shares, he has two choices: wait until enough shares come out for sale at the price he is willing to pay or increase the bid price to get the shares faster. Some stocks are said to be hard to buy because few shares are available at any given price. Sometimes it takes an institution weeks or even months to accumulate enough shares of a stock at the prices it deems reasonable.
- “PassTrak Series 7: General Securities Representative License Exam”; Dearborn Financial Services; 2003
- U.S. Securities and Exchange Commission: Specialists
- U.S. Securities and Exchange Commission: Market Maker
- U.S. Securities and Exchange Commission.gov. "'Restricted' Securities: Removing the Restrictive Legend." Accessed May 3, 2020.
Based in San Diego, Slav Fedorov started writing for online publications in 2007, specializing in stock trading. He has worked in financial services for more than 20 years, serving as a banker, financial planner and stockbroker. Now working as a professional trader, Fedorov is also the founder of a stock-picking company.