What is a stock?
A stock is a small piece of ownership in a real company. Here is what that actually means.
5 minEducation only, not financial advice
In your worldBuying a mascara makes you a customer of L’Oréal. Buying a L’Oréal share makes you a (very small) owner of the company that makes Maybelline, Lancôme and Garnier.
A stock (also called a share) is a small piece of ownership in a company. When a company is split into, say, one billion shares and you own one, you own one-billionth of that company.
Why companies sell shares
Companies sell shares to raise money: to build factories, launch products or hire people. In return, shareholders own part of the business and share in how it does, good or bad.
How you can gain or lose
- The price changes. If more people want to buy a share than sell it, the price goes up. If more want to sell, it goes down.
- Dividends. Some companies pay part of their profit to shareholders. Many growing companies pay none.
- You can lose money. Share prices can fall, sometimes a lot, and a company can fail entirely.
Where shares are traded
Shares are bought and sold on stock exchanges such as the New York Stock Exchange, Euronext Paris or the Tokyo Stock Exchange. Each company has a short code called a ticker.
Companies in this lesson
L'Oréal
OR.PA · Euronext Paris
The world’s largest beauty company: Lancôme, Maybelline, Garnier and more.
Estée Lauder
EL.US · NYSE
Prestige beauty: Estée Lauder, Clinique, MAC, La Mer.
e.l.f. Beauty
ELF.US · NYSE
Affordable cosmetics brand that grew fast with social media.
Examples only. Not a recommendation, and no endorsement by these companies.
Match
Match each term to its meaning
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Quiz
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