So as I have said on other posts I concider myself new to stocks and shares even if I have dabbled into bits and bobs over the years and done plenty reading.
The part which confuses me though is how can companies use the money shareholders give them if shareholders sell them off so fast.
Example what if someone bought into a company for 100m in one day then the next day if he could sell take away that 100m with a profit.
Does the company see wow we are now 100m richer today but then the next day see they just lost over 100m the next day.
Can someone clear up this for me. I get the long term investors they could somehow use that money but day traders with massive pockets just how to make the quick buck. How do they deal with them?
Vast majority of transactions on stock exchange don’t involve giving or taking money from the company but from other shareholders. Company gets money in the Initial Public Offering where shares are first sold from the company to investors.
The company only makes money from the shares when they are first issued, for example in a IPO. After that it’s shareholders buying and selling amongst themselves. the company neither makes or loses money in these transactions
If the company can say to investors or lenders 'our market cap is $XB, they can borrow money or ask for funding based on this number. The higher it goes, the easier that is. Also look up offerings, even after IPO they can cash in if the value is high.
