When I buy a stock, how does the money get to the company, if it does at all?
Eura asks:
As I understood it, when a company goes public they do their IPO. The underwriter pays the company in full for the shares. Then the underwriter releases the shares into the market. So the brokers get it and then the individual investors get it. Is this how it works? It would seem the money stops at the underwriter.
As I understood it, when a company goes public they do their IPO. The underwriter pays the company in full for the shares. Then the underwriter releases the shares into the market. So the brokers get it and then the individual investors get it. Is this how it works? It would seem the money stops at the underwriter.
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yes the company gets the money from the underwriter or if not using an underwriter from the sale during the ipo. Buying and selling stock has nothing to do with the company unless they are buying it back.
Yes, this is how it goes.
The company gets its money through the IPO and unless they issue more share capital that is it. All other transactions and profits and losses are taken by the market, meaning the shareholders (and all others that get commission on transaction like brokers)
Well not exactly , the company makes a profit and releases its shares and then as the stock pric moves up ,and compnay starts performing well , it can raise money on the same by pledging the shares or also buy back the shares from open markets or aslo
issue bonus or even rights to raise more money .
It bottoms out to how the company performs basically .