How does a company make money on shares?

Question

When a company decides to sell shares,how do they keep makeing money of them after they have sold them.(eg If l sell 1million for a dollar each,then l get one million dollars,but how do they keep makeing money),And how do the shares go up,(if l buy a share for $1.30 how does it go up to say $1.35 why do you pay more for it.?

Answer 1

The company doesn't make any more money on shares. The owners of the company (that is -- the shareholders) make money.

Prices going up may still help the company. It could allow them to issue more shares inthe primary market, get a better rate on debt, etc.

Answer 2

The company directly benefits only when it sells shares in the primary market. All the trading of the stocks in the stock market does not benefit the company at all.

But the company can benefit from the high prices of its stocks. This happens when it is buying up other companies by paying in their stocks. So higher the stock price, the less money it has to come up with and also less stock as well (which is gd news to the current stockholders since their holdings will not be diluted, given same amt of stocks they hold.)

The stock prices will rise or fall depending on many factors like for instance the industry the company is in is expecting a boom. Or the company is expected to turn in a huge profit because of asset sale, people expecting a larger dividend from the company and so on. Because remember the stocks price is a reflection on the expected worth of the company per share.

Hope the information helps!

Answer 3

They dont keep making money off the shares. They actually pay share holders a dividend.
The only way they can make money is by buying the shares back at low prices and selling them again.

Shares become more or less valuable depending on the performance of the company.

Answer 4

If you go to Yahoo finance and look under insiders, you will see the amount of shares held by the CEO and president etc. That is how they get the extra from the shares going up in value. Another way is to sell more shares or split their stock. Their primary business is what they are more concerned with for producing money. The stocks are fringe benefits to the primary share holders, and not all stocks pay dividends.

Answer 5

When shares are sold the company still exists just as it did before. It just has some new owners. It is NOT a loan. It is a sale of part of the company to new owners. At least part of the money from the initial sale of shares is reinvested in the company. The value of a company is based on the net present value of future cash flows. As they increase, the company increases in value.

Answer 6

Shares of stock are sold by companies as a way of getting money in order to expand their business. They are sort of a loan from the people who buy the stocks to the company issuing them. The dividends they pay out, which are based on how well the company performs, would then be seen as the interest.

The value of a stock in based on people's percention of how much of a dividend they will get while they hold the stock, thus also it is based on at least the perception of how well the company is doing. At least that's the long-term view of a stock. The more short-term view is that you expect the value of the stock to rise more soon, at which point you will sell it.

Answer 7

Company makes profit. Some of the profit is retained for expansion/growth and the rest is distributed to shareholders by way of a dividend. But it is really the growth of the company (your company) that you are looking for. Stockbrokers act as agents for the client. The more money the client makes the more they will use the broker. Thus the broker makes more commision: everyone wins!

Answer 8

it is capital for the company to operate with,as of now with the panic sell off on wall street,expect lots of lay offs

Answer 9

If you are Nike then you sell shoes.
If you are Ford then you sell cars.

You get the idea.