I have experience in investing and invest in several mutual funds each month, I understand the concepts of how the investor makes money from shares (either by dividend pay-outs or increases in share price). I also understand how a company initially makes money from selling shares, they... well, sell shares!
What I don't understand is how they continue to make money (from the market) once the initial shares have been sold.
Here is an example:
- Company A goes public and creates 100 shares, the Owner keeps 50 shares and lists the other 50 on the stock market for $5 each
- 50 shares are sold at $5 each, the company now has $250 to use for buying equipment
- 1 year later, the share price has doubled, so the initial investors have made money and the 50 shares traded publicly are now worth $500 combined
- Now the owner wants to raise more money through the market... how? Can they 'split' one of their shares into more shares and sell them at the new value? Isn't that just creating artificial money out of nothing?