From the shareholders’ perspective, they make a one-time purchase that can potentially make them massive profit with minimal effort on their part, but for the company, isn’t that like taking out a high-interest loan that they can never pay off? Wouldn’t an actual loan be better if they just need money?
In: Economics
“The company” is not an entity on its own, it isn’t like “the tree that owned itself”. It started out with one or more owners and those owners can have a variety of reasons to sell shares of ownership. Selling stock can provide more funds to a company than they could ever borrow, and increase the value of the owner’s remaining shares. Or perhaps the original owner just wants to cash out and realize the value of some of their shares.
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