4 ms·

If you buy into an IPO you're helping the business raise funds. If you buy stock from other stock owners it doesn't help the business.

• maxqin1 6y ago
  > If you buy stock from other stock owners it doesn't help the business Incorrect. That's what keeps the market for the stock liquid, and that contributes to value which the company can exploit through future stock issuing. Not to mention the indirect benefits to stakeholders within the company in terms of price and liquidity.
  • tromp 6y ago
    If I buy the stock in order to hold it for 30 years, doesn't that reduce liquidity?
    • maxqin1 6y ago
      No, because your holding increases the price until someone else decides it's time to tell. In other words, the lack of liquidity increases price. Regarding your original question, that increase is GOOD for the company because it can raise more money for selling the same amount of stock.
      • tromp 6y ago
        You cannot argue that buying raises the price and selling drops it, since every trade has a buyer and s seller.
        • maxqin1 6y ago
          Flagged for arguing markets & economics 101. Ffs
• robjan 6y ago
  The existence of a secondary market helps the business to sell their IPO in the first place. Additionally they can raise more funds by selling additional shares. Additionally the people who own shares own the company so what benefits the shareholders benefits the company and vice versa as their interests are the same.