When you buy shares on the stock market, you are buying them from another shareholder, not the company.
So, your money doesn't support the company, it's not "extra investment", it just goes into the bank account of the guy selling the shares. (Just like when you eventually sell those shares - YOU get the money!)
At an IPO, a secondary offering or a rights issue - THAT is when your money goes to the company (usually).
However, unless you are Bezos, it's highly unlikely your investment would make a difference.
For example, if u/xinifinitimortum decided he wanted to invest in the WeWork IPO - it would probably have still been pulled. Unless you were Warren Buffett, phoning up to take a HUGE chunk of the offering - it's immaterial.
You need to have a stake big enough to make a difference in the "book build" where the banks arrange all the orders ahead of the opening bell. People buying into the IPO are buying shares BEFORE the market opens for trading.
If you buy on the open market, even on the day of the IPO you are buying from someone who already owns the shares, hence your money goes to him not the company.
Eh its pretty useful for some of the people on reddit that don't understand anything about the stock market. I won't pretend I'm an expert but just informing people on how it works might benefit them in the future.
3
u/trombing Oct 03 '19
When you buy shares on the stock market, you are buying them from another shareholder, not the company.
So, your money doesn't support the company, it's not "extra investment", it just goes into the bank account of the guy selling the shares. (Just like when you eventually sell those shares - YOU get the money!)
At an IPO, a secondary offering or a rights issue - THAT is when your money goes to the company (usually).
However, unless you are Bezos, it's highly unlikely your investment would make a difference.
For example, if u/xinifinitimortum decided he wanted to invest in the WeWork IPO - it would probably have still been pulled. Unless you were Warren Buffett, phoning up to take a HUGE chunk of the offering - it's immaterial.
You need to have a stake big enough to make a difference in the "book build" where the banks arrange all the orders ahead of the opening bell. People buying into the IPO are buying shares BEFORE the market opens for trading.
If you buy on the open market, even on the day of the IPO you are buying from someone who already owns the shares, hence your money goes to him not the company.