Where does the money go when you buy or sell stocks?

Question

If I buy 100 shares of a company, does their bank account go up? And if shares are sold do they go broke?

In: 0

Answer 1

When shares of stock are bought and sold, you are buying from and selling to other investors. You buy 100 shares because some other investor is selling 100 shares. The company itself doesn’t have any direct involvement or financial stake in your buying to selling shares.

Only when a company sells shares at their IPO (initial public offering) or during rare secondary offerings do companies directly gain money from sale of shares. And only during planned/announced share buybacks, company acquisitions, or companies going private do shares being sold get bought by the company.