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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Depends on whether you’re buying it in an initial public offering or if they’re already on the secondary market. If you’re buying it from an IPO, then the money goes to the company that issued the stock. But if you’re buying stock that has already been issued and is being exchanged on the market, then the money goes to the person that owned the stock before you did.
Think of it this way. If I own a company and want to raise money for expansion, I can choose to take a portion of my company’s stock and sell it on the stock market. In that initial sale, the initial public offering, the money goes into my company. But now that that stock is on the market, it gets bought and sold by other people, with none of that money going to or coming from my company.
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