A stock or share is not a symbol on a computer screen or newspaper. Stock is ownership in a company. This means that a private company decided to allow the public to be part owners of the firm and sold shares of ownership through a stock offering. If a company has one million shares of outstanding stock, then owning one share means that you own one-millionth of that company.

When you buy a stock, you are paying for a small percentage of everything that the company owns, buildings, chairs, computers, etc. Also in this case, you will own a slice of every dollar of profit generated in the business.

Being a shareholder of a public company does not mean you have a say in the operation of company. Each stock you own has a little bit of voting power, so the more stocks you have, the more decision making power you have. Any person or institution that owns over a majority of the stock is called the “controlling shareholder”. Essentially, this person can do anything they want in a company - right down to firing the CEO.

When a company first sells its shares to the public, this is an initial public offering (IPO), or “new issue”. The money paid by investors for the newly-issued shares goes directly to the company. Immediately after the initial public offering, shares begin trading on the exchanges as investors call their brokers to buy or sell.cIn this case, money passes between investors without going go the company.

The money raised from selling stocks of a business can be used to build new plants and facilities, pay down debt, or acquire another company. Company looks for investors to finance this growth and taps the public markets for these funds.

Another reason for selling stock is that the founders of the company may want to realize some of their investment without selling the entire firm. However, a smart owner will keep at least 51% of the stock, which will allow them to retain control of the day to day activities.