We always see multiple organizations around the globe. A stock is nothing but an entity which is representing that company. Almost 90% big multinational companies have stocks which are listed on stock exchange. For example Microsoft, Google, Reliance, Tata group, HCL, Wipro, Tech Mahindra, Wipro, Aurobindo Pharma, Hero motocorp etc. Each stock has their own valuation based on current market rates user can buy the share at the low price and then he can sell at higher price.
The stock is a common word which we always heard when it comes to shares market. Stock can be defined as the stake in the company, the stock represents the company. When someone buys stock it means a person owns his share in the company. When someone buys shares of a company it means that person indirectly claiming to the earnings of the company. As the company grows, as companies profit grow bought share’s values gets increased and vice versa.
However, when a person buys the share of a company that means a person is buying his stake in the company. Purchasing of shares is limited to the growth and to the loss of the company’s profit. Buying share is limited to the corporation. The person who has purchased shares cannot own corporations. Company and stakeholders both cannot show ownership on each other’s assets.
If the person buys 10 percent shares of a company then that person cannot determine that he owns 10 percent stake in the company. Instead, that person can say he bought 10 percent shares of the company.
Let’s take an example, if Ramprasad buys 25 percent shares of Infosys then it doesn’t mean Ramprasad own one-fourth stake in the company. This statement is false and illegal to express. Instead, Ramprasad can say he purchased one-fourth shares of the Infosys.
So, purchasing stocks doesn’t mean to own company. Stockholder or stock purchase takes to buy some percentage shares. The stockholder can participate in shareholder meetings and votings. The maximum percentages of shares held by stockholder the more powerful he is in voting. Stockholder will be authorized to get companies profit in terms of dividend declared by companies in their board meetings.
The company usually raises their funds by listing stock in stock exchange. A shareholding is nothing but holding a certificate of a particular company. Certificate entitles person as a shareholder. Sometimes the owner of the company needs to invest in a new project within the company that times company owner needs capital. He can gain capital by reducing his holding in stock by selling his share on a stock exchange. This process is known as initial public offer i.e. IPO
When the company gets founded initially companies co-founder can be the only shareholders of that particular company. Let’s if new company has three founders and one investor then each of them will hold one-fourth of the company’s shares. However when the company starts growing then the company needs more funding to raise hence company raises IPO’s and the henceforth private company turns into the public company.
A stock price in the live market often fluctuates. Stock price fluctuation happens due to multiple reasons including demand and supply chain. Market experts often try to predict market mood by analyzing market fundamentals and by studying technical analysis.
Share price most of the time depends on the buyers and sellers ratio. When buyers outnumber the sellers then stock price rises. Eventually, when sellers outnumber the buyers and at the same time, buyers stops buying then stock price drastically falls.