Google stock prices dropped 8% from yesterday and just after opening on the 20th of Jan 2012 they have lost $52 a share.
For any other stock this may be dramatic but when you consider that the price of a single share of Google Stock still costs $587.57 then you have to take this with a grain of salt.
Normally businesses will split their shares meaning if you buy in early for say $100 a share then Google will double down and you will have two new shares both worth $50. This allows investors that may want to get into the stock to purchase new shares at a price level that they feel is more reasonable.
Remember when you purchase stock after an IPO has been made the original company does not get more money. The only way that a company can get more money is when they sell new shares.
After the stock has floated around the stock market .. after the IPO or Additional Share Offering.. the price is meaningless to the Company other then to set the price of remaining shares that the company may hold as an investment.
Large companies often buy back their stock when it drops in value. Home Depot has been notorious for doing this during down times in the market but most companies do this.
If you are buying stock today then you are purchasing it from a share holder not the company.
This is really why the Stock Market is a SCAM ..
Unlike Bonds which are considered a Loan to the company .. stock that is floating around in the market really has no attachment to the original company.
Also consider there are different types of stock. There is Voting Stock where you can purchase say 5 to 25% of a business and then you will have the ability to vote on who is the CEO and how things are run.
There is also nonvoting stock. Basically what you just bought is a piece of paper with the companies name on it.
If the company starts doing things you don’t like then nonvoting stock gives you no rights.
If the CEO of the company is seen eating a hotdog and this drives the stock prices down to $0 then you lose everything.
And if the company goes bankrupt or dissolves then you are basically screwed out of your investment.. you can’t drive down to the business and say I have 200 shares of your company I want my money back… because it has no attachment to the company and they have no obligation to buy it back.. you have to find another SUCKER to pawn it off on.. good luck ..
Maybe its time investors wake up.. start buying bonds which are paid back even if the company goes bankrupt.. you may not get 1:1 return but you would have the right to tell the company to sell every last office chair to make sure you get something….
That is unless Obama comes in and treats you like General Motors and takes away all of your rights and give all of your stock to the UAW Auto Workers Union as a gift…
Stocks .. are a Scam.
Unless you are buying 51% of voting stock from a company that you and a partner opened… that way you have control over business decisions.