What Are Stocks?

Learn what stocks are, why companies issue them, and what it means to be a shareholder.

5 min read

What Exactly Is a Stock?

A stock (also called a share or equity) represents a small piece of ownership in a company. When you buy a stock, you become a partial owner — a shareholder — of that company.

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Think of it like a pizza. The company is the whole pizza, and each stock is a slice. The more slices you own, the bigger your share of the pie.

Why Do Companies Issue Stocks?

Companies sell stocks to raise money. Instead of borrowing from a bank, they can sell small pieces of their company to the public. This money helps them grow — building new products, hiring employees, or expanding into new markets.

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IPO (Initial Public Offering)

The very first time a company sells its stock to the public. It is the moment a private company becomes a public company.

What Do Shareholders Get?

As a shareholder, you can benefit in two main ways:

1. Capital Gains — If the stock price goes up after you buy it, you can sell it for a profit. For example, if you buy a stock at $50 and it rises to $75, you have made a $25 gain per share.

2. Dividends — Some companies share their profits with shareholders by paying regular cash dividends. Not all stocks pay dividends, but many established companies do.

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Dividend

A regular payment made by a company to its shareholders, usually from profits. Think of it as a thank-you payment for being an owner.

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In STONX, you trade with virtual money, so there is zero financial risk. It is the perfect way to learn before using real money!

Common vs. Preferred Stock

Most stocks you will encounter are common stocks. They give you voting rights and a share of profits. Preferred stocks are less common — they typically pay fixed dividends but usually do not come with voting rights.

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For your STONX games, you will be trading common stocks and cryptocurrencies. Understanding these basics will give you a big advantage!