Stocks (shares in companies)
Stocks represent ownership in a company. Below is an interactive walkthrough showing how companies raise capital, how shares are created, and how events like splits or new issuance change ownership and price.
Step 1
The company wants money to grow (e.g. build new stores, make new products.)
It Goes Through an IPO (Initial Public Offering)
Company
→Bank
→Government Agency
→Public
Shares Are Created
You cut 1 billion slices — each slice = 1 share.
You own 0.00001% of the company
Shares Start Trading on the Stock Market
After the IPO, shares are bought and sold on exchanges. Price moves with company results & expectations.
$60.00
+2.00
How Companies Change Their Shares
1
Authorized Shares
Limit set initially
Authorized
1,000,000,000 shares
Issued
500,000,000 shares
2
Can They Add More Shares Later? Yes, but…
Requires approvals & amendments
Company
Board Approval
Shareholder Vote
Amend Docs
New Authorized Limit
True or False: Can a company add shares whenever it wants?
3
Stock Splits
More shares, same value
Split ratio:
SHARE
$100
SHARE
$100
$400
More shares, same total value — makes the stock feel more affordable.
4
Issuing New Shares to Raise Money
Issue
new shares
Before
Shareholders (100.0%)
New Shares (0.0%)
After
Shareholders (99.6%)
New Shares (0.4%)
This is why existing owners have a smaller percentage.