buying stocks increases value of a company.....where does that money go?

Question

im puzzled. the money spent on stocks goes to the company?....and they invest it as they see fit?...how does that work?

Answer 1

Operation

Answer 2

The stocks are representative divisions of a company. The demand for the stock increases the stock value. Since companies generally own large percentages of their own stock, this is what increases the value of the stock. Only the money made on an Initial Public Offering goes directly to the company. This occurs only 1 time when the company decides to go public, issues a certain amount of shares, sets an initial price based on company size and desireability and sells the shares. Once this is done, the share price will fluctuate based on the supply and demand of that share. The demand will go up if the company makes money, has low debt, is sucessful and innovative, and any other desireable news. The company may only sell 49% of its shares and over time, it can sell more or issue more stock. This is generally frowned upon since it effectively "waters down" the companies stock, making more shares and devaluing the already issued shares. The money made and lost by a stock only effects the person buying and selling the stock.

Answer 3

When the company FIRST releases the stock the money goes to the company but that's only during the IPO. After that, the money from increasing value of the stock goes to the investors who own it.
If I buy a stock at $45 a share and the value goes up to $50 and I sell it - I make $5 per share. The company makes nothing.
The company still cares about the value of it's stock because shareholders are technically part owners of the company and they get to vote in company affairs.

Answer 4

You can buy stocks in one of the two ways

(1) IPO - In this case, a company which was held privately is floating its share in the market for the first time. So, when you buy these stocks, the money goes to the company and they invest it in their business.

(2) After this, when the stocks are already in market, you buy them from other share holders. This is the secondary market. In this case, you are paying another stock holder some money to get the stock transferred to you (or your broker) and that person gets the money. The company does not get money in this case.

Answer 5

It gets invested into the company so they have $$ to spend on their product. When they get profit from selling their product, that profit gets shared with the stock holders (stocks go up). When they spend it all and run away, stocks plummet.

Answer 6

Selling (or buying) stock in a company does not increase the value of a company. If you own a bicycle and you sell it, the value of the bicycle doesn't increase. But it does add to the money in your pocket.

Answer 7

buying shares raises the value of each share - so the money go to all the shareholders. Usually the company itself owns majority of shares, so they get money out of that and can invest into the development, or distribute the gains amongst the executives, which they do a lot.

Answer 8

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Answer 9

1

Answer 10

If the company owns the stock then the money goes to them, if it belongs to a shareholder then the money goes to the holder.