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Ah, no. The moment the company gets money, is when it sells the stock. After that, unless the company sells more stock, or buys and re-sells its stock, it recei
by redtexture 9y ago
Ah, no.
The moment the company gets money, is when it sells the stock. After that, unless the company sells more stock, or buys and re-sells its stock, it receives zero more capital financing dollars, unless it undertakes other financing activity, such as the sale of bonds.
There is no indirect means to receive money, except for profit, and that it is not related to stock.
Profit is ultimately the primary means for company cash liquidity, held as retained earnings, after the company has survived its initial years of inception and growth.
- vasilipupkin 9y agoSorry, you are missing the point. A liquid secondary market is what enables the company to go public in the first place. There would be no initial sale of stock without it at all. In addition, liquid secondary market enables the company to incentivize its employees and undertake other financing activities, as well as gives value to its remaining treasury stock.
- littlestymaar 9y ago> A liquid secondary market is what enables the company to go public in the first place. Dividends enable the company to go public. The secondary market makes the stock liquid, which is convenient but not mandatory.
- vasilipupkin 9y agoNo. Growth companies may not pay dividends for years and still go public. Dividends are paid by private companies too. The only reason to go public is the liquidity
- geezerjay 9y agoThat's not true. A company doesn't manage to sell its shares because of dividends. Dividends may be used to estimate value base on the expectation of returns, but if dividends were relevant or even dictated the share price then stocks of companies that posted negative results would be worth zero. Which they don't.