If a company offers 15% off IPO to their 20,000 investors, WHAT WILL HAPPEN?
Syble asks:
If a company offers 15% off IPO to their 20,000 inestors, and the investors are limited to get only 100 shares, thats a total of 2,000,000 stocks at -15%. off IPO. will this do any dmg to the companys stock? also how many stocks can company sell up to?
If a company offers 15% off IPO to their 20,000 inestors, and the investors are limited to get only 100 shares, thats a total of 2,000,000 stocks at -15%. off IPO. will this do any dmg to the companys stock? also how many stocks can company sell up to?
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I’m afraid that your question is apparently based on several separate misunderstandings of the way the stock market works, so that it is not possible for your question to be answered. If you are asking this for a specific reason (for example, if you are trying to figure out a way to fund a startup company) then you really should consult with an attorney who specializes in corporate law. If you are asking just out of academic interest, let me point out a few of the basic problems:
1) A company with 20,000 investors cannot, under US securities law, have an IPO. An IPO is an initial public offering, but if a company has over 300 investors, it is required to file publicly, so it would already BE public, and thus could not have an INITIAL public offering in the first place.
2) At an IPO, the company initially begins selling shares (not “stocks”) at a particular price, after which the market bids the price up and/or down. Therefore, a company is not legally allowed to offer any particular class of people (such as investors) a discount to the market price.
3) The number of shares being bought or sold is completely irrelevant without looking at the larger picture. One share of Warren Buffett’s Berkshire Hathaway is currently trading at about $87,000 but one share of many ‘penny stocks’ trade at $0.01. Therefore the value of 2,000,000 shares (not “stocks”) depends on a large number of factors, such as whether there a total of 2,000,00 or 200,000,000 shares issued.
As you can see, this is a big, complicated question, and you really, really should speak with an attorney if you are thinking about DOING anything along these lines.
A good way to get a quick introduction to how the stock market works is to play the Stock Market Game, which is at the URL below (and it’s free).