ADS / ADR Ratio: The Float Trap Hiding in Foreign Small-Caps

Direct answer: An ADS (American Depositary Share) is a foreign company's stock made tradable on Nasdaq or NYSE through a US depositary bank. The ticker trades in ADSs, not ordinary shares. One ADS can represent several ordinary shares, the "ADS ratio." If that ratio is 35 and you read the ordinary share count as the float, you overstate the tradable float 35 times. Always convert the float to the unit that actually trades: the ADS.

If you trade small-cap gappers, sooner or later you'll pull up a foreign name, an Israeli or Chinese company on Nasdaq, and the float number will look strange. Sometimes way too big. That's often the ADS ratio biting. It's one of the quietest float traps out there, because every number involved is technically correct, they're just in the wrong unit. Here's how the structure works and how to read the float the right way, yourself.

What is an ADS / ADR?

A US exchange like Nasdaq or NYSE lists shares of US companies. A foreign company, say one incorporated in Israel or China, has its ordinary shares trading in its home market. To let US investors trade it here, a depositary bank holds a block of those ordinary shares abroad and issues US-tradable securities against them. Those securities are American Depositary Shares (ADSs).

The ADR (American Depositary Receipt) is the certificate that evidences ownership of ADSs. In practice traders say "ADR" and "ADS" interchangeably, but the precise term for the thing that trades is the ADS.

The key point: the ticker you trade is denominated in ADSs, not in the company's ordinary shares. Those are two different units, and the exchange rate between them is the ADS ratio.

What is the ADS ratio?

The ADS ratio is how many ordinary (home-market) shares one ADS represents. The depositary sets it, and it varies wildly from name to name:

• 1 ADS = 1 ordinary share
• 1 ADS = 4 ordinary shares
• 1 ADS = 10 ordinary shares
• 1 ADS = 35 ordinary shares

There's no standard. Companies pick a ratio (and sometimes change it) so the ADS trades in a "normal" dollar range. A cheap ordinary share might get bundled 10-to-1 or 35-to-1 so the ADS isn't a sub-penny stock.

The float trap: a real example (QNRX)

Take Quoin Pharmaceuticals (QNRX), an Israeli company on Nasdaq. Its ratio is 1 ADS = 35 ordinary shares.

As of August 12, 2026:

• 70,294,615 ordinary shares
• 2,008,417 ADSs (70,294,615 ÷ 35)

Now watch the trap. A trader glances at a data field showing "70M shares" and reads it as the float. But QNRX doesn't trade in ordinary shares. It trades in ADSs. The actual tradable unit count is about 2 million ADSs, not 70 million.

That's not a rounding error. That's a 35x overstatement of the float. A trader who thinks the float is 70 million believes there's 35 times more tradable supply than there actually is. Everything downstream, how tight the float is, how a raise dilutes it, how much liquidity sits in the tape, gets read completely wrong.

A 2 million ADS float and a 70 million share float are not the same stock behaviorally. One is a hard micro-float; the other looks like an ordinary small-cap. Confuse the two and your entire read on liquidity and dilution is off by more than an order of magnitude.

How to read an ADS float correctly

The rule is simple: always bring the float back to the unit that trades, the ADS.

$$\text{Float in ADS} = \frac{\text{Float in ordinary shares}}{\text{ADS ratio}}$$

Steps:

1. Find the ADS ratio. Look on the cover or in the notes of the SEC filings, a 10-Q, 20-F, 6-K, or the F-1/424B prospectus. Hunt for the exact phrase: "each ADS representing N ordinary shares" (or "each American Depositary Share represents N ordinary shares").
2. Get the ordinary share count. From the same filings, the ordinary shares outstanding (the home-market number).
3. Divide. Ordinary count ÷ ratio = the count in ADSs. For QNRX: 70,294,615 ÷ 35 ≈ 2,008,417 ADSs.
4. Then subtract insiders/restricted holders to move from ADSs outstanding toward the tradable float, same as any float calculation, just done in the right unit.

The order matters less than the unit. If any number in your float math is in ordinary shares while the ticker trades in ADSs, the whole result is off by the ratio.

Where the ratio is disclosed

• 20-F / 6-K. Foreign private issuers file the 20-F (annual) and 6-K (interim). The depositary arrangement and ratio are described here.
• 10-Q / 10-K. Some foreign issuers file domestic forms; the ADS terms appear on the cover or in the notes.
• F-1 / 424B prospectus. The registration and offering documents spell out the ratio for any ADS offering, "each ADS represents N ordinary shares."
• Deposit agreement. The full legal terms of the ADS program, including how the ratio can change.

Search the filing text for "American Depositary Share," "ADS," "ordinary shares," and "representing."

Why FloatVerify flags ADS names

Most float tools hand you a single number and don't tell you what unit it's in. For an ADS ticker, that's exactly where the 35x error creeps in, one field is in ordinary shares, one is in ADSs, and nothing warns you.

FloatVerify tags ADS names with an "ADS" badge and converts the float into the tradable unit automatically, using the ratio pulled from the filing. You see the ordinary count, the ratio, and the resulting ADS count, each sourced and dated. We give you the fact and the conversion, not a verdict. Whether a ~2M ADS float changes how you read a name is your call, not ours.

This is a case where two "correct" numbers disagree because they're in different units. Surfacing that gap, instead of silently picking one, is the whole point.

Is a big ordinary share count a red flag?

Not by itself. A large ordinary share count on an ADS name is completely normal, that's just the home-market unit, and a high ratio is a design choice, not a warning. This is data, not a verdict. The mistake isn't the structure; the mistake is reading the ordinary count as if it were the tradable float. Once you convert to ADSs, the picture is honest. What you do with a 2 million ADS float versus a 70 million ordinary count is entirely up to you. The filing gives you the ratio. The rest is arithmetic.

FAQ

What is the difference between an ADS and an ADR? An ADS (American Depositary Share) is the actual security that trades, one unit of ownership in the foreign company held via a US depositary bank. An ADR (American Depositary Receipt) is the certificate that evidences ownership of ADSs. In everyday use the terms get used interchangeably, but the ADS is the tradable share.

What is the ADS ratio? The ADS ratio is how many ordinary (home-market) shares one ADS represents. It can be 1, 4, 10, 35 or any number the depositary sets. If 1 ADS = 35 ordinary shares, you divide the ordinary share count by 35 to get the number of ADSs.

Why does the ADS ratio matter for float? Because the ticker trades in ADSs, not ordinary shares. If you read the ordinary share count as the float but the ratio is 35, you overstate the tradable float 35 times. The real tradable float is the ordinary float divided by the ratio.

How do I find a company's ADS ratio? On the cover or in the notes of its SEC filings (10-Q, 20-F, 6-K or the F-1/424B prospectus). Look for language like "each ADS representing N ordinary shares" or "each American Depositary Share represents N ordinary shares."

Are ADR shares outstanding the same as float? No. Shares outstanding reported in ordinary shares is the home-market count. The tradable float in ADS terms is that ordinary count, minus insiders and restricted holders, divided by the ADS ratio. Mixing the two units is the trap.

FloatVerify shows float, dilution and cash burn on US small-cap gappers. For ADS names, we tag the ticker and convert the float into the unit that actually trades, every figure sourced and dated, so you can see the ratio and which filing it came from. Data you can check yourself. → floatverify.com