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Companies often issue common stock long after IPO. Tesla famously did this earlier this year in order to finance an accelerated release schedule for the Model

Companies often issue common stock long after IPO. Tesla famously did this earlier this year in order to finance an accelerated release schedule for the Model 3. Companies undergoing temporary financial trouble also issue common stock. The major banks issued large amounts of common stock during the 2008 financial crisis. Most have not yet repurchased the issued stock. Technically and in the extremely specific case, yes, buying stock on the market doesn't create jobs for anyone. However, the liquidity of stock in the aggregate is one part of the confidence of the financial system. Upon IPO, buyers of the stock need to know they can sell their stock on the market after it fulfills their objectives.

camiller 10y ago
Yeah, I purposely ignored the edge cases of selling treasury stock or existing companies making new issues. An existing company making a new issue is kind of unusual because it dilutes the value of existing shares which is harmful to existing shareholders. generally a bad thing. Selling Treasury stock does get new cash in the hands of the company, but usually that was because at some point the company had excess cash and invested it in it's own shares in the form of a buyback, less often the company is still holding shares from it's own IPO. It later needs the cash and re-sells the stock, hopefully at a better price. I would argue though that the day to day trading of common stock on the open market is the more general rule not a "extremely specific case". Normally, if I go to make a trade in my account, it is not a new issue and would be a coincidence if it was at the time a company was selling treasury stock. no argument in stock liquidity being a measure of confidence, but not really to the point I was addressing.
- linkregister 10y ago
  I agree with everything you said. I wanted to mention liquidity because I (wrongfully) thought your post implied it wasn't particularly important; is indeed paramount for the stock market to work at all.

camiller 10y ago

Yeah, I purposely ignored the edge cases of selling treasury stock or existing companies making new issues. An existing company making a new issue is kind of unusual because it dilutes the value of existing shares which is harmful to existing shareholders. generally a bad thing. Selling Treasury stock does get new cash in the hands of the company, but usually that was because at some point the company had excess cash and invested it in it's own shares in the form of a buyback, less often the company is still holding shares from it's own IPO. It later needs the cash and re-sells the stock, hopefully at a better price. I would argue though that the day to day trading of common stock on the open market is the more general rule not a "extremely specific case". Normally, if I go to make a trade in my account, it is not a new issue and would be a coincidence if it was at the time a company was selling treasury stock. no argument in stock liquidity being a measure of confidence, but not really to the point I was addressing.

linkregister 10y ago
I agree with everything you said. I wanted to mention liquidity because I (wrongfully) thought your post implied it wasn't particularly important; is indeed paramount for the stock market to work at all.