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The difference is that these companies actually have real assets, and holding stock legally grants you fractional ownership over them. Your hypothetical is more

The difference is that these companies actually have real assets, and holding stock legally grants you fractional ownership over them. Your hypothetical is more like an Enron situation where shareholders are told that there are assets behind their stock that really don't exist. That's why the stock price plunged when the fraud was revealed, and why my net worth doesn't budge when you grant me the account. As a thought experiment, do you think that your ownership of a company is also meaningless if there are only 2 shareholders? What about 3 shareholders? At what point does breaking a company up into fractional shares become a ponzi scheme?

tablespoon 5y ago
> The difference is that these companies actually have real assets, and holding stock legally grants you fractional ownership over them. So? How valuable is "legal ownership" over an asset if that doesn't actually entitle you to anything besides a certificate of ownership? In practical terms, non-dividend-paying stock actually looks a lot like an NFT, unless you've amassed enough voting control to actually matter.
xg15 5y ago
Genuine questions, what does legal fractional ownership entitle you to do?
- chii 5y ago
  it entitles you to sell that legal fractional ownership to someone else. If your fraction is high enough, you could have full legal control. But since it's very dispersed, there would be a discount on the value of that legal ownership. But the fact that you still own it is worth something, and that is exactly what the share price is indicating.
xg15 5y ago
> At what point does breaking a company up into fractional shares become a ponzi scheme? Depends on what being a shareholder entitles me to do. If I can't vote and don't have a realistic expectation of getting dividends and have no other rights, then yess, that "ownership" seems pretty meaningless to me even if there are only two shareholders. If you have voting rights, you can give an actual answer to the question: At the point were the fractions are small enough that the vote doesn't have any practical influence anymore.

tablespoon 5y ago

> The difference is that these companies actually have real assets, and holding stock legally grants you fractional ownership over them. So? How valuable is "legal ownership" over an asset if that doesn't actually entitle you to anything besides a certificate of ownership? In practical terms, non-dividend-paying stock actually looks a lot like an NFT, unless you've amassed enough voting control to actually matter.

xg15 5y ago

Genuine questions, what does legal fractional ownership entitle you to do?

chii 5y ago
it entitles you to sell that legal fractional ownership to someone else. If your fraction is high enough, you could have full legal control. But since it's very dispersed, there would be a discount on the value of that legal ownership. But the fact that you still own it is worth something, and that is exactly what the share price is indicating.

xg15 5y ago

> At what point does breaking a company up into fractional shares become a ponzi scheme? Depends on what being a shareholder entitles me to do. If I can't vote and don't have a realistic expectation of getting dividends and have no other rights, then yess, that "ownership" seems pretty meaningless to me even if there are only two shareholders. If you have voting rights, you can give an actual answer to the question: At the point were the fractions are small enough that the vote doesn't have any practical influence anymore.