lets say a company called xyz recently got listed on the nasdaq exchange and priced at 10$ if I execute a buy order, who is exactly selling their shares? Just ordinary people like you and me? why would one buy shares priced at 10 and sell them to me for the same price? I just don’t get it…? does IPO’s play a key role here?
Bonus question:
I often see recently listed stocks going straight down, take $BREA for example. how is this possible? why would anyone buy their shares and imminently sell for a cheaper price?
In: 3
Whenever *anyone* creates a company, the owner(s) create a certain number of shares that have a “par” value based on how much money was invested by the owners to create the company.
Say you and a buddy create a lawn mowing company. You each put $100 in to get started. You do the paperwork with your state, pay a fee and create “Buddy’s Mowing” with 1,000,000 (500,000 shares to each of you) shares of stock. Each share of stock would be worth $0.0002 ($200/1,000,000).
10 years later, you are the dominant mowing force in your city and you decide to go public. You find a broker to represent you, and an exchange and each of you decide to offer 100,000 shares of stock at $10. So you get $1M from the investors who buy those shares and you still each have 400,000 shares, now worth $10 each ($4M worth of stock each).
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