A stock is a share of ownership in a publicly listed company. When a business sells shares to the public, anyone can buy in, becoming a part-owner of that company. Stock prices rise and fall based on the company's performance, investor sentiment, and broader market forces.

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Why companies issue stocks\n

Companies issue stocks to raise money without taking on debt. Instead of borrowing from a bank, they sell pieces of ownership to the public. Investors who buy shares are betting on the company's future, if the business grows, their shares may increase in value. Some companies also pay regular dividends: a share of profits paid directly to shareholders.

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Stocks come in two main types:

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Common stock, the most widely held type; shareholders may receive dividends and often get voting rights on key company decisions.

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Preferred stock, shareholders typically receive dividends before common stockholders, but usually have no voting rights.

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What owning a stock means\n

Owning stock doesn't mean you run the company. What you get is a claim on a small portion of its value, and the potential to benefit if it grows. The total value of a company's outstanding shares is its market capitalization (market cap), calculated as share price multiplied by total shares. Market cap is a useful way to gauge a company's size: small-cap, mid-cap, or large-cap.

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Each listed company is identified by a ticker symbol, a short code like AAPL for Apple. Stocks trade on exchanges where buyers and sellers are matched continuously. The spread between the highest buying price (bid) and the lowest selling price (ask) reflects how liquid a stock is.

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Why stock prices move\n

Stock prices are driven by supply and demand. When more people want to buy than sell, prices rise. When more people want to sell, prices fall. The forces behind that shift include:

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Company earnings and revenue outlook

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Industry trends and economic conditions

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News, announcements, and product launches

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Overall investor sentiment and market liquidity

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There's also a distinction between price and value. Price is what someone paid for a share today. Value is an estimate of what the business is actually worth, based on its assets, earnings, and future prospects. The gap between the two is where investors form their judgments, and where opportunities for gains or losses emerge.

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Want to start investing? bunq lets you buy and sell stocks directly from your bank account, no separate brokerage required.

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Frequently asked questions\n

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What is a stock in one sentence? A stock is a tradable share of ownership in a publicly listed company.

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Are stocks guaranteed to grow? No. Stock prices can go up or down, and you may get back less than you invested.

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Do all stocks pay dividends? No, dividends are not guaranteed and depend on the company's profits and policy.

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What's the difference between a stock and a share? The terms are often used interchangeably. "Stock" usually refers to ownership broadly; "share" refers to a single unit of that ownership.

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