Example: if I bought $100 share of ABC company and tomorrow it’s $90, I get that I would incur a $10 loss if I tried to sell it, but I don’t understand what happens to the $10 difference ABC company still has from me.
Edit: okay so in this scenario:
1. i bought the share from the issuer
2. there is a downturn and the s&p index is down by 3,000 points
The first people to hear that the market is about to drop went ahead and cashed out their $100 share back from abc, however I was not lucky and my share is now worth $90. Wouldn’t ABC company have my $10? All the companies listed on the index, they get to keep the difference of the value of what the share was yesterday vs. today. Sure, the equity part of ABC company got smaller, but they still keep the $10 difference should everyone come back and cash out their shares?
In: Other
You are trading your cash for their share at a given price, a $25 stock dropping to $20 simply means the bid (buyers) and ask (sellers) have met (closed the spread) and shares are changing hands at a given price, or if there are no trades happening it may also be the middle of the gap between what the buyers are willing to pay and sellers are trying to get. The ‘price’ is determined by the balance of these orders, if there are a lot of sell orders and the sellers keep lowering their price to be the first to fill the buy orders, the price will drop, thus a $10B company can ‘lose’ or $6B in ‘value’ with far less than 6B changing hands.
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