Why people sell and buy shares/stocks?

In our last blog, we discussed what the difference between shares and stocks is. Now we know what these terms actually mean, let us see why people sell and buy their shares/stocks.

Why people sell and buy shares
Why people sell and buy shares

Why do companies sell their shares?

There are number of reasons that companies sell their shares. The most basic reason among that is raising capital. When a company requires raising money, they have basically two options; one is borrowing money and second is selling shares of the company. Sometimes companies want to eliminate the scenario of borrowed cash repayment as it blocks future cash flow. Here comes the “Stock Selling” option in scene. Once the stocks are sold, company can use the capital in their business. Also there are chances that company can buy their own stocks after a time span.

Apart from this, there can be several reasons behind this decision. However this is the most basic reason behind selling the shares of any company.

What is an IPO?

IPO stands for “Initial Public Offering”. An IPO is the very first share issued by a company to the public. Before IPO, the company is considered as “Private” i.e. consist with primary investors (founders, friends, family etc). On the other hand, after IPO, the company is available for all the interested public buyers. The public will be allowed to buy shares of any company only after IPO, not prior to that. After the IPO is issued, the company stock is traded in Stock Exchange.

Why do people buy Shares?

Are you not wondering that ok, a company raises funds by selling stocks, but what does a buyer earn by purchasing those stocks? Why do people buy shares? Let us find the answers.

Investing in Stock Market, for some people, is about making money out of investments. Suppose Mr. M buys shares of Rs.1 today and sold it at Rs.3 after 6 months. Then the profit made on investment of Rs. 1000 is Rs.2000. Also investing in stock gives the trader an opportunity to own a part of that company.

These are just basics of Shares and Stocks. If you want to know more about Stock Market, get in touch with ProfitAim Research. We are a SEBI Registered Firm who offers best Stock market tips like Stock Option Tips, Stock Cash Tips, Stock Future Tips, Nifty Option Tips, Nifty Future Tips, Intraday Trading Tips etc.

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Difference Between Stocks and Shares - What are stocks and shares?

What are Stocks & Shares?

You may have heard the term Share, Stock Market, Trading etc. If you wonder and want to know what all these terminologies actually mean you are at the right place. What are stocks and shares? What is the difference between shares and stocks? What is Stock Market? And how does Stock Market works? Let’s find out the answers for these questions one by one. In this blog, we will discuss the meaning and difference between Stocks and Shares. Also we will explore why do companies sell their shares?

Stocks And Shares
Stocks vs Shares

What are Stocks & Shares?

Do Stocks and Shares refer to same thing or they are used for different contexts? Let’s see.

Nowadays, people have started using the terms “Stocks” and “Shares” interchangeably. Both of these terms are used to depict your ownership in company. We should be aware that there are two certificates that are seen in terms of the ownership of the company.

  1. Ownership of a particular company is called as the “Certificate of Shares”.
  2. Ownership certificates of more than 1 company are called as “Certificates of Stocks”.

But there is slight difference between “Stocks” and “Shares”. Shares refer to your ownership in any specific company. However stocks refer to your overall ownership in one or more companies. If you own a share in any company, you will share the company’s profit and so you are called a Shareholder. Let us understand this with an Example:

Assume that Mr. ABC owns certificate of Company X Inc.  We will call them as Certificate of Shares. Now if Mr. ABC owns certificate of many companies, we would call them Certificate of Stocks.

From above statements, it is very clear that Stocks are just larger form of Shares.

In our next blog, we will be discussing about Stock Market and its basics. If you need to know more & trade in the Stock Market, you can contact ProfitAim Research. We are a SEBI Registered investment advisory firm that helps traders’ fulfils their dream of financial expansion and stability.