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by tromp 1873 days ago
If you buy into an IPO you're helping the business raise funds. If you buy stock from other stock owners it doesn't help the business.
2 comments

The existence of a secondary market helps the business to sell their IPO in the first place. Additionally they can raise more funds by selling additional shares.

Additionally the people who own shares own the company so what benefits the shareholders benefits the company and vice versa as their interests are the same.

> If you buy stock from other stock owners it doesn't help the business

Incorrect. That's what keeps the market for the stock liquid, and that contributes to value which the company can exploit through future stock issuing. Not to mention the indirect benefits to stakeholders within the company in terms of price and liquidity.

If I buy the stock in order to hold it for 30 years, doesn't that reduce liquidity?
No, because your holding increases the price until someone else decides it's time to tell. In other words, the lack of liquidity increases price. Regarding your original question, that increase is GOOD for the company because it can raise more money for selling the same amount of stock.
You cannot argue that buying raises the price and selling drops it, since every trade has a buyer and s seller.