This is our attempt to take the mystery out of the stock market. Here we summarize what a stock is.
Meet Dave and his team. 3 years ago, Dave started a technology company.
Dave's company is called Pear. Pear was started in Dave's Basement
Pear has developed a few apps that have done well. The money from the apps has funded Pear's growth and ability to move from Dave's basement to an actual office.
Pear has created a new technology that has received a lot of attention.
Dave and the team want the world to use their tech. They need to mass produce the technology but they need money. Right now Pear is being funded by the success of their apps but it's not enough money to develop, market, and sell their new tech.
Pear Needs Money.
Pear plans to go to the stock market for money by offering the public shares of its company. Right now, these five people are the owners of Pear
Pear is going to offer the public 50 million shares of the company.
Pear's stock will initially be sold for $25 per share. Allowing Pear to raise enough money to produce, market, and sell their new tech and develop more new tech.
$25 x 50 Million Share = $1.25B
Pear is now a publicly traded company, you can log in to your brokerage account and buy a share or shares of Pear.
You are now a shareholder in Pear. As an owner of Pear your hope is that Pear continues to develop great products that consumers want to buy. You also hope that Pear's increasing sales will cause their stock price to increase.
In summary a stock is a piece of a company. We hope that this helped you get a better understanding of what a stock is. Keep an eye out for more articles coming to our Beginners Block. Get notified about our new articles by leaving us your email.