What is stock?

Question

I know stock is part of the company. But how much exacly is "stock". By that I mean how much percent of the company is 1 stock? I hear companies selling millions of stock. So does every company have the same initial amount of stock? Or can any company produce stock at demand?

I also want to know one more thing. When you buy stock, the company gets the money. But if you want to sell stock back, who pays for it? If it's the company, then it doesnt get much profit, because share prices often get higher on the first day so if the company has to pay more than it sold for, it loses cash. So who buys the stock others want to sell?

Also what is the average price for stock, and what is low and high price for stock?

Answer 1

There isn't a set number of shares that a company has. A company can have 10 shares, or it can have 10 million shares. Whatever it is, the total shares cannot exceed 100% of the company. So if a company has 100 shares outstanding of stock, then 1 share is 1% ownership of the company. If the company decides to sell more shares, they can, but it dilutes the value of the stock. If the company with 100 shares decides to sell 100 more shares, now 1 share will only be worth .5% of the company.

Answer 2

Stock is ownership in the company that issued it. How much of the company you own depends on the # of shares issued. If they issue 100 shares, and you own 4 shares, you own 4%. If they issue another 100 shares, and you don't buy any, you now own just 2%. If the company then buys back 150 shares, your 4 shares now represent 8% of the company.

Each company can determine how many shares they sell, and how often, subject to the laws of the country that they operate in, of course.

Answer 3

Stock [which is basically an outside investment in a company] is sold by the 'share'. The prices of shares of stock vary enormously depending on how well the company is doing. Those who own shares are called 'stockhholders' and can attend yearly meetings held by the company to report to them on how things are going, etc. One share in a "blue-chip" [hugely successful big guy company] can run into the hundreds...modest or unsuccessful companies can have shares running as low as a dollar per share.

IMHO, buying shares in a company you don't know much about is a lot like sitting down to play poker with guys named Doc...you've got to have money you're willing to lose, and enuf nerve to wait out a downturn in the stockmarket and hope for better days. It's gambling with your own money, my friend.

Answer 4

1 share of stock is worth 1/Nth fraction of the company where N is the number of shares available. Every company has a different number of shares and can create new shares whenever they want. However, if they create more shares they dilute the value of their stock, so it's not something that happens regularly.