3 ms·

What about issuing more stock after IPO? For many companies money flows in continuously, check the Tesla graph I sent above. It wouldn't be called "Initial Pub

• steve1977 1y ago
  I think my terminology might not be the test (non-english native speaker). When I say initial offering, I mean whenever stock is newly (initially) issued - whether that's in IPO, after an IPO or also in a private offering. Not sure what the correct term would be. My point was, money essentially only flows into the company at that point. E.g. company issues stock, investor A buys it. When investor A sells to investor B, money only flows between these two investors. No money flows to the company. Unless - as you have pointed out - company assumes the role of an investor in its own stock. But the fact alone that a stock price is rising as such does not generate any new capital to work with for the company. And that is a point many people seem to misunderstand. When Microsoft is worth 3.76 trillion USD, that doesn't mean that Microsoft has 3.76 trillion USD it can work with. That was the point I was trying to make.
  • alexey-salmin 1y ago
    That's true but saying that investors moving money between each other is a "pretty accurate description of how the stock market works" is simply incorrect. The above is a mere byproduct of the market working. The market "works" by giving companies and entrepreneurs access to capital, the rest is a derivative of that. Otherwise you can as well trade postal stamps rather than stocks.