 Is Indian Bank ICICI going to crash with in few days ? |
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should we take out our savings from this bank?... |
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 Where does the lost money go in the stock market. Example, you invest $10, drops to $5, where does that $5 go? |
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I guess, I mean where does that lost $5 cash go when it is sold, as I paid up front $10 in cash.... |
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 How to choose a mutual fund? |
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Rebecca S | How does selling stock help a company? |
I don't understand how it works when a company sells shares of itself. How does that help or profit the company? |
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danny_boy_jones
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Stock represents ownership in a company. Common stock comes with a right to share in the profits, a right to vote, and a right to sell that interest.
Money paid to a compnay for ownership generally goes to purchase assets that the company would use to produce income. |
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loiho5
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If you own the company and you don't have any more money to put in it, and you sell a million dollars worth of stock..........you now have a million dollars to spend. It isn't borrowed; if you lose it all, it's the stockholders loss. |
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Lex
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When a company sells their stocks, in other words, shares of ownerships of the company, they raise money (capital) to invest on new products/projects.
From what I've remember, most company sell or trade their stock when first starting out its business to raise money, or when a private company decide to go public, meaning sharing ownerships with who ever wants to buy the stocks.
Selling stocks helps a company by raising money it needs to invest or fund a new research or new products, hoping in returns the new products will provide a bigger returns.
For example:
{{You decided you spend $10 on lemon, sugar and water to start a lemonade business (thats the money from selling stock, the initial investments). At the end you hope to make $20 or more from selling the lemonade (thats the return on the investments)
So if you borrowed $1 from 9 people, you'll pay them back $2, and you make $1. But in a corporate world, that amount are in millions. And if someone bought a 1,000 shares of stocks for $20, and if at the end of the year the company was successful and the stock price went up from $20 to $60, you can sell the stock and make and make $40,000 (60,000-20,000).}}
Hopefully that helps. |
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Michael
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If stock is sold, then the company is doing well and there is an interest in that particular market. If the industry is doing well, the company will sell more stock shares because people have reason to suspect they will make more money by investing in a company that is doing well. That makes the company more profitable and ultimately worth more.
For example, if many computers and computers components are being sold by Windows, the market is doing well and brokers will want to buy stock because they will be able to make money when the company does and sell the stock for a profit. But if for some reason, computer sales went down, then the stock would be worth less and not promise as much money. |
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jbelkin800
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They raise money to use to buy new equipment, hire more employees, pay down debt, etc ... all things companies do to make more money. Companies need "working capital" so they can buy more raw goods to make final products that they sell (or have better distribution by building more warehouses or hiring more sales people) etc - again, everything to make more money.
The other choice - borrowing the money with interest of course is like any debt, something you have to pay back.
Issuing stock essentially is saying, our company is worth $1 million dollars (hypotetically) and we're issuing 1 million shares at $1. After you research us, are you agree - if so, buy our shares. Most companies will sell off anywhere from 10-35% of the company to outsiders when they go public/start selling shares so presume this company sells off 35% of the company, they would now have $350,000 to use to make more money. Of course, most companies go public and brings in tens/hundreds of millions and ocassonally, billions ...
More detail - stocks are "better" for a company in that they are essentially unsecured so if they fail, the price can drop to zero and the investor loses everything with the company owing them nothing. (There are some other classes of stock that do offer a more secured return and the company has pledged specific assets of the company. Companies can also issue bonds which are more secure for the investor).
BUT the reason investors are willing to "risk" it is once they decide this company is trustworthy enough - stocks can grow at a much faster rate than any other investment choice - actually at potential rate no other investment choice can readily match AND is "relatively" easy to sell.
Case in point. Google went public at $15 a share and is now selling in the $480 range. It would be pretty hard to find any other investment that can get high so fast so quickly - that is why people are willing to risk it.
Now there are about another 20 reasons why a company would issue stock but these are the main reasons. |
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Chris P
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Companies sell stock to raise money for the company. |
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the man
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the reason companies sell stock is to raise capital to fund expendetures. The company issues stock and it is sold to the public. The money received from the sale of the stock then can be used by the company. After the initial public offering of the stock the company really does not benefit anymore from the stock the sharholders are the ones that benefit or not, most companies usually retains some of its stock to be offered to their officers or to be sold at a later date. It is actually a good sign if officers own a lot of a companies shares because they will have more interest in the benefit of shareholders and it is also a signal that the officers feel the companies stock will perform strongly. Share holders of a company can actually be a pain since they have voting rights therefore many corporations have to be concerned more with how certain decisions will effect shareholders. |
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