If I buy 100 shares of a company, does their bank account go up? And if shares are sold do they go broke?
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Most shares of a company are being sold on the market by either individuals or unrelated investment companies. There’s basically a constant queue of people willing to sell for X and people willing to buy for Y, and any exchanges that can happen with that happen. Basically, if you want to sell/buy immediately, if there aren’t enough sellers then the buy price goes up until you find a seller, and if there aren’t enough buyers then the sale price goes down until you find a buyer.
A decent chunk of those people making sales will be employees of the company who have received shares as part of their compensation package. Most below a certain level will just turn around and sell them at the earliest period they’re allowed to.
Now the shares that the company gives to their employees don’t just come out of thin air. While they could technically create more shares, it would dilute the value of the existing ones, so companies will try to do share buybacks to get some of their shares back into their possession. This is also a way that companies can spend any extra profit they have in any fiscal year to reduce their tax burden, while essentially holding onto assets to use for payment in future years.
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