When a company "goes public (IPO) " - two things can happen - the company issued NEW shares in the business and the OWNERS sell some of their shares in the business. Only the money paid for the NEW shares go to the business - increases it's capital. When existing owners sell - the proceeds go to them - nothing is going to the business.
The stock market mainly trades in USED shares - where one shareholder buys stocks from a selling shareholder - the amount of shares that exist doesn't change - only the names on the stock certificates.
The Board of Directors decided how much of the profits of the business will be returned to shareholders as dividends. Usually every three months or once a year. Most businesses don't distribute the entire profits - partly because the dividends are taxed as income for the shareholders - having already been taxed as income for the business. Most of the profits are retained by the business to finance growth.
The amount of the company that you own is the number of shares YOU own divided by the total number of shares that have been issued. So if you have a hundred shares and the company has issued one hundred million shares (a low number - many large companies have billions of shares issued) - you own one millionth of the business. You are considered a large investor if you own 5% of the business.
While you have some of the basics correct, it is a lot more complicated. First, no company issues only 100 shares - companies issue millions of shares and they get distributed to hundreds or hundreds of thousands of buyers - so while in theory one person or company could own all the shares of another company, in reality, it does not happen.
Next, when a company makes a profit, it usually does not return all that profit to the shareholders - in fact, using Apple, many companies return only a small percentage of profits to shareholders. The rest is retained by the company to plow back into the business.
Finally, unless the company (Apple in your case) does a share buyback, no, an investor cannot sell the shares back to the company. And yes, once Apple or any other company sells shares, once the IPO is done, the company no longer has a direct interest in those shares.
When purchasing stock, you become an owner of the company. Your value goes up and down depending on performance as well as many other things. Neither you or anyone else can sell your shares back to the company unless the company does a stock buy back. You really need to spend time learning the market. There are free online classes that will help you understand. I'm only giving very basics.
I've been reading about stocks all over the Web. However, I am very confused. Can someone explain to me the following questions about stocks?
For example:
Apple wants to sell 100 shares of stock to the public (ipo) at a price of $1/share.
Investor A wants to buy all the shares, so they gave Apple $100 for 100 shares. Apple took the money. Company owns 100 shares. So, whenever Apple's profits increase, Apple pays Company A the interest, because they own 100 shares?
Company A is now the shareholder of Apple, so whenever Apple gain profits, Company A earns money?
Another scenario, Company A owns the 100 shares, Apple's profits increase, so Company A sold the shares to Company B. Apple's profits decrease, nobody wants to buy Company B's shares, can they sell the shares back to Apple?
I just don't get it. When Apple sold their shares, they're not involved anymore?
Somebody, please help me get this right.
Thanks!
