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? asked in Business & FinanceInvesting · 11 months ago

What are reasons for stock offerings?

It seems that sometimes a stock has something called an offering for shares. Usually the price goes down a little. Why wouldn't they just buy at the current market price? Is a stock offering a sign of a good or bad financial company?

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  • kswck2
    Lv 7
    11 months ago

    The two primary reasons to make stock offerings, would be an IPO-Initial Public Offering or a Reissue. And IPO is an attempt to raise a large amount of capital to establish a company and to allow it to be traded on an open market(effectively selling the company to many investors, who will now have a voice in how you handle your  company through stock ownership). The 2nd way is to Reissue stock, or issue More stock. That means the company needs More capital to work, but it would devalue the cost of stock already outstanding. 

    Both are quite common. 

  • 11 months ago

    <<<What are reasons for stock offerings?>>>

    It is a way for the company to get money.

    <<<Why wouldn't they just buy at the current market price?>>>

    Buyers of stock do normally pay the current market price when there is one. There is no market price when there is an initial public offering. 

    Buyers of stock normally pay less than the current market price in a secondary public offering because the company selling the shares sets the price below the current market price. If they set the price of the offering above the market price no one would buy the shares offered instead of buying them on the market.

    <<<.Is a stock offering a sign of a good or bad financial company?>>>

    No.

  • Anonymous
    11 months ago

    The purpose of offering stock for public purchase is to raise capital (money).

    ?????

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