imported post
ainokea wrote:
Why do you think a company sells their stock? It is so they can raise capital ($$$) to reinvest into the company. They sell off part of the comapny with the hope that the new capital will help it grow. Sounds like a big benefit for the company.
This is true during the IPO (initial public offering) or at other times when the company decides to sell stock.
However, most of the time, the stock that is bought and sold is being exchanged between third parties. The money does NOT go into the company. So at a first pass, buying stock on the open market generally has no direct benefit to the company unless you are buying directly from the company itself.
Taken to a 2nd order analysis things change a bit. Your purchase of stock, even on the free market, helps demonstrate demand for that stock which keeps the price up. This can benefit the company if it decides to sell additional stock to raise money.
More common however is that large stock owners in a company are often company officers. Higher stock prices certainly benefit them when they decide to liquidate their personally owned shares. These are the guys who most often could affect policy change.
