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
Think of it like an item from the store. You bought it for 100 dollars from the company(an IPO for example) and it is worth 100 dollars.
Now say you want to sell that item and the price someone is willing to pay is 90 dollars. Now you give them your item and receive 90 dollars, but the transaction has nothing to do with the company anymore other than the value you and the market feel the item has.
The only value the item has to the company past the original sale is the amount they set aside for themselves or the market price if they decide to do another round of funding and create more shares.
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