What is the benefit of stock market for the company?

enriquep said:
Why you say that? sorry if it's a question too stupid for you, but I cannot understand why any owner will sell half or more of his company to the market if he know the company will profit much better in the future.

Actually is easier to see my problem:
If you have shares on Microsoft and you think the company will profit better in the future, you won't sell them, you keep them.
Why Bill Gates sold them then?
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"tomorrow is promised to no one."
bottom line answer is diversification of their assets.
 
Pekelo said:
Not necessary insolvent, just in need of a capital infusion, but yes, you can look at it that way. You with your trust and little money are backing the company.

Another reason for the IPO could be that early private investors are pushing for it because they want a pay day. That raises the question, why don't they just sell their private stock privately? I am not sure but an IPO probably brings in more money...
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After a company has over 500 shareholders (I think it’s 500, but it may be 250), it is obligated to disclose all of its financial information publicly (as per the sec). At this point, there are only advantages to going public, such as adding liquidity for all of those 500+ shareholders.
 
treeman said:
After a company has over 500 shareholders (I think it’s 500, but it may be 250), it is obligated to disclose all of its financial information publicly (as per the sec). At this point, there are only advantages to going public, such as adding liquidity for all of those 500+ shareholders.
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a private co. is not likely to have that many shareholders unless they gave stock to numerous employees.
 
Pekelo said:
It was a legit question. When I watch Shark Tank, I often ask the same question. Why would they give up 20% of their little company for 100K, when they could just ask for a business loan from the bank?

The answer is that sometimes the bank is not willing to take the risk and they can't borrow in any other way...
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Surely you can think of many more reasons for why an owner would raise money (public or private offering), rather than "they cannot borrow".

Off the top of my head:

-Raise money to fund new investments, R&D, acquisition
-Valuations are high (buy low / sell high)
-Take chips off the table
-Take risk off the table (pass risk to new investors)
-Borrowing may have to be paid back in a shorter time frame than owner would like
-Raise liquidity for taxes or other big personal purchase
-Diversification (sell equity, buy real estate or other asset)

Hopefully you understand this before you trade stocks, at least.
 
"Take chip off the table...Take risk off the table...Diversification
If you have 50% of your assets tied up in the company, something major could happen. A major lawsuit could wipe out the company; they were clubbing baby seals, selling infant formula in China, creating shoes that caused health problems!! You want to take your money and put it elsewhere if you ever have to file bankruptcy. You move the assets all around. 30 years ago I got sued...Thought I would lose everything. I bought 4 burial plots!! The family burial plot is exempt in bankruptcy court...Plan ahead. Suit dropped, sold plots...
 
clacy said:
Hopefully you understand this before you trade stocks, at least.
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Understanding stocks is completely unnecessary for successfully trading stocks. Surely, you understand this.

Just like you don't have to understand cryptos to profitably trading them.
 
Pekelo said:
Understanding stocks is completely unnecessary for successfully trading stocks. Surely, you understand this.

Just like you don't have to understand cryptos to profitably trading them.
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so you are trying to install a new Techinal vs Fundamental war :)
 
There are many benefits of registering a company in the stock exchange. For example, if the company is in debt, they can reduce it by offering the company to the people. They can also reduce any risks if the company goes broke.
 
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