Stock is the face of company’s growth. almost 90% big multinational companies have stocks which are listed on the stock exchange. Microsoft, Google, Apple etc. Each stock has its own valuation based on the current market rate. Investor can buy the share at the low price and then he can sell at higher price to earn profit.
Stock is simply the stake in company, when someone invests in stock it means person is owning the stake in company. Being investor if you’re buying a share of a company it means you’re indirectly claiming to the earnings of the company. As the company’s profit grows stock valuation increases.
Holding the Stock, What Does it Mean…?
Being investor if you’re buying the stock of the company then you’re purchasing the stake in company. Buying shares is limited to the growth and loss of the companies profit. Being investor purchasing shares doesn’t mean you’re owning the corporation. Company and stakeholder cannot show ownership on each other assets. If you’re purchasing 10 percent stake of the company shares then you’ve bought 10 percent shares of the company.
Let’s take an example, if Brett bought 25 percent shares of Apple then it doesn’t mean Brett own one-fourth stake in the company. This statement is false and illegal to express. Instead, Brett can say he purchased one-fourth shares of the Apple.
So, purchasing stocks doesn’t mean to own company. Stockholder buy some percentage of shares. Stockholder can participate in shareholder meetings and can vote. The maximum percentages of shares held by stockholder the more powerful he is in voting. Stockholder is authorized to receive companies profit in terms of dividend declared by companies in their board meetings.
Stock Listing and IPO
Company raises their funds by listing stock in stock exchange. 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 internal project of company that time company owner seeks for 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
At the time of company foundation initially compny’s co-founder are the only shareholders of founded company. If new company has three founders and one investor then each of them will hold one-fourth of the company’s shares.
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 analysing market fundamentals and by studying technical analysis.
How Stock Price Raise or Falls
Share price most of the time depends on the buyers and the seller’s ratio. When buyers outnumber the sellers then stock price raises. Eventually, when sellers outnumber the buyers and at the same time, buyers stop buying then stock price drastically falls.