Stock facts for kids
Have you ever wondered how big companies get money to grow? One way is by selling small pieces of their business to people. These small pieces are called shares or stock. When you buy a share, you become a part-owner of that company.
People or groups who own shares are called shareholders. They hope the company will do well. If the company makes more money, the value of their shares might go up. This means their investment could grow!
In some places, like the United Kingdom and Australia, people often say "share" instead of "stock." But they mean the same thing: a piece of a company you can own.
Contents
What is Stock?
Stock is like a tiny slice of a company. When a company needs money to expand, invent new things, or hire more people, they can sell these slices. Each slice is called a share. By selling shares, companies can raise a lot of money without taking out big loans.
For example, if a company needs $1 million, they might sell 1 million shares for $1 each. Anyone who buys these shares becomes a part-owner.
Why Do Companies Sell Stock?
Companies sell stock for many reasons. The main reason is to raise money, also known as capital. This money helps them:
- Build new factories or offices.
- Develop new products or services.
- Hire more employees.
- Pay off debts.
Selling stock is a way for companies to get the funds they need to grow and become more successful.
When you own stock, you become a shareholder. This means you have certain rights:
- Ownership: You own a small part of the company.
- Dividends: Some companies share their profits with shareholders. This money is called a dividend.
- Voting Rights: You might get to vote on important company decisions. This usually happens at special meetings.
- Potential for Growth: If the company does well, the value of your shares might increase. You could then sell them for more than you paid.
How Stock Value Changes
The value of a company's stock can go up or down every day. This depends on many things, like:
- How well the company is doing.
- News about the company or its industry.
- What people think the company will do in the future.
- The overall economy.
When many people want to buy a stock, its price usually goes up. When many people want to sell a stock, its price usually goes down.
Images for kids
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One of the earliest stock by the Dutch East India Company
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A stockbroker using multiple screens to stay up to date on trading
