The difference between equity and shares

Question

The difference between equity and shares

In: Economics

Answer 1

Equity is an overall stake/ownership amount in something, shares are how that may be divided up. If you and a friend have a lemonade stand, you might each have a 50% equity stake in it. When it grows into a gigantic chain of lemonade stands and goes public, you’d each have shares in representing whatever your stake is at that point. Maybe you each have 100,000 shares representing 20% equity, while other other 60% of your company’s equity is owned by other investors.