If a person owns $2B worth of stock in a company that only has $300M cash on hand. And that person decides to sell all their stock. Where does the rest of the money come from? I can’t imagine people continuing to buy shares that are put on the market so the money has to come from someplace.
In: Economics
The stock is only worth $2B because someone else is willing to pay $2B in cash to buy those stocks. Trading stocks does not have anything directly to do with the company. It is all between the investors and stock brokers. So the company still keeps their $300M cash on hand as if nothing happens. But someone have to come up with the $2B in cash if they want to buy all the stocks. So they are the source of the cash.
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