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QuestionsCategory: Valuation Quadrantnumber of shares
Gloria asked 2 years ago

Hi Victor/Rusmin
Would like to get your advice on the number of shares figure, using FB AR 2014 as a reference, please.  On page 70, the number of shares used for basic & diluted EPS computation were listed in the table.  On page 76, under the common stock header  (last paragraph), it says “As of December 31, 2014, there were 2,234,113,007 shares and 562,792,201 shares of Class A common stock and Class B common stock, respectively, issued and outstanding.”
-What does issued and outstanding mean?
-Should we include both Class A and Class B shares in the ‘number of shares’ figure?
-Should we use the share figure for basic or diluted, and what are the differences between them?
-Which figures should we use (i.e. the ones presented in pg 70 or pg 76)?

1 Answers
Victor Chng answered 2 years ago

Hi Gloria,
Class A shares are for investors like us to purchase. As for Class B shares, they are usually for management team and it is not traded. 
When using the number of shares, you just have to use the Class A shares. For US companies, they usually have stock option, RSU or repurchase. Hence, you should use the diluted number of shares which account for future dilution. The figure should be 2664 (Number of shares used for diluted EPS computation)