What a stock is and why a company goes public

A share is one unit of ownership in a company: it entitles you to a slice of its future profits and a vote on its major decisions. The stock market is where those shares are bought and sold, and a company is listed when its shares are traded there.

A company goes public when it needs money from many people at once and accepts the price: opening its books and sharing control.

What you actually buy when you buy a share

You buy a piece of the company's ownership. The number you see on the screen is that piece's price. It gives you two things: a proportional slice of everything the company earns from now on, and a vote at the shareholder meeting, the gathering where the owners approve the accounts and the big decisions.

Digi España is a telecom operator: it sells internet and mobile. To go public it had to file a document with its accounts at the CNMV, the public body that supervises the Spanish stock market. Digi filed it on July 9, 2026.

There it set a price of €5.60 per share and a valuation of €1,662 million for the whole company. That valuation is set by the company and the banks selling the shares.

Divide the valuation by the price of one share and you get roughly 297 million.

Buying one meant owning one of those 297 million pieces: Digi's towers and contracts, and whatever it earns from then on.

The shareholder gets paid last

Shareholders stand at the back of the payment queue. That has a name: a residual claim. They collect whatever is left after the rest.

Digi closed March 2026 carrying €646.4 million in debt. Is that a lot?

Across all of 2025, €929 million came in from selling its services. That is its revenue. What it earned is a different thing: what is left after paying wages, electricity and masts.

So it owed a little over two thirds of what it takes in each year. If it ran into trouble, that debt gets paid before any distribution to shareholders: banks first, then suppliers, and whatever's left at the end.

Often there's nothing left.

In exchange for standing last, shareholders keep everything that's left over, with no ceiling. Whoever lent the company money collects their agreed interest and not a euro more, however well the company does.

Is the vote worth anything with one share?

With one share out of 297 million, that vote decides nothing, in the same way one vote doesn't decide a general election.

The right exists all the same, and it is identical for each share.

A company's capital is the whole of its shares. An investment fund pools money from many people and buys with it, so it can end up holding a large piece of that capital. Then its votes do carry weight.

In a listed Spanish company, 3% of the shares is enough to force the directors, the people who run the company, to call a shareholder meeting. That comes from article 495 of the Spanish Companies Act.

Which is why BlackRock, the world's largest fund manager, publishes every quarter how it voted at each meeting, and pushes on what executives get paid or on environmental policy. That is how owners keep control over whoever runs the company.

In operations the shareholder meeting approves, the distribution of votes decides whether they go ahead.

A merger, for example: two companies that join into one. Or a capital increase: the company creates new shares and sells them to raise money. Each old share then becomes a smaller piece of the company, and that is dilution.

What limited liability means

If the company goes bankrupt owing money, you owe none of it. At most you lose what you paid for your shares, not a euro more. That's limited liability, and it's the reason anyone can buy a share without risking their house.

If someone had bought one Digi share at €5.60 and the company collapsed owing its €646.4 million from March 2026, that shareholder loses €5.60. Nobody claims a piece of the debt from them and nothing gets seized.

Other company structures don't work that way: the partners answer for the business's debts with their personal assets, their house included.

Limited liability lets an ordinary person put a small amount into a large business knowing from the start the most they can lose. That known maximum comes back in the chapter on risk, when we cover how much to risk on any single trade.

How the money a company earns reaches your pocket

Two routes, and only two. The company pays out part of the profit in cash, or keeps it to reinvest in the business. Which of the two makes sense depends on where the company is in its life, not on the route itself.

The cash payout is called a dividend. The company takes part of what it earned and deposits it in each shareholder's account, in proportion to how many shares they hold. It has its own mechanics and dates, which is why it gets its own reference guide in this course: the dividend, start to finish.

Reinvestment gives you nothing today and may give you more tomorrow. If the company keeps the profit and uses it to buy machinery or build network, it expects to earn more a few years out. If the people buying and selling that share believe it, they pay more for it, the price rises, and your slice is worth more without you receiving a euro.

Digi earned €14 million in 2025 out of the €929 million it took in: very little of what came in stayed. The reason is in its accounts: it was putting hundreds of millions a year into fibre and mobile network.

A company like that pays out almost nothing. It isn't doing badly: it's building.

At the opposite end sit mature companies, with the business already built. They pay out a large share of what they earn, because they have nowhere better to put it.

On a broker's screen, the firm you buy and sell through, a company mid-construction and a mature one look identical. And they do very different things with their shareholders' money.

Why a company decides to go public

A company goes public because it needs more money than a loan or a handful of private backers can give it. It sells pieces of itself to thousands of people at once, raises money it never has to repay, and in exchange it opens its books and shares control.

The most common reason: growth needs capital

Digi's business requires spending on fibre and masts for years before it makes money. It had invested around €1,300 million in Spain since 2018, over €700 million on fibre alone, and expected close to €400 million more in 2026.

That money has to come from somewhere. A loan has to be repaid with interest, and Digi was already carrying €646.4 million in debt. Money from new shares never gets repaid: the shareholder takes on the risk in exchange for ownership.

Primary and secondary: two different things happening at once

A primary offering is a capital increase opened up to everyone: the company creates new shares and sells them to whoever wants them. The cash lands in the company's account and goes toward investing or paying down debt.

In a secondary offering there are no new shares. A shareholder already inside sells the ones they held, and that money goes to them, not to the company.

Most listings mix the two, and the proportion tells you what matters: is this deal funding the business, or letting someone already inside cash out?

The other three reasons

An exit for those already inside. Employees, founders, and early-round investors hold shares worth something on paper that they can't sell. Listing gives them somewhere to sell them.

Credibility. A listed company has to publish its accounts, and that builds trust with customers and suppliers.

Currency for buying other companies. Listed shares work as part of the payment in an acquisition. A private company has no such currency.

The listing of Aena, the company that runs Spain's airports, moved €4,263 million in February 2015 and sold 49% of its shares, according to the document it filed at the CNMV.

It was entirely a secondary offering: that money went to the State, which owned it and was selling, not to Aena.

Why many large companies choose not to list

The best-known case in Spain is Mercadona, the supermarket chain. In 2025 it took in €41,858 million and employed 115,000 people, according to the results it presented in March 2026. And it isn't listed.

It doesn't need to be: it makes enough from its own business to grow, so it doesn't sell part of its ownership or publish its plans every three months.

And this matters to you: there are huge companies you will never be able to buy. The ones on the market are the ones that needed outside money and accepted the price.

What happens to your shares if it stops being listed

A company can leave the market, and not always because things went badly. Most commonly, another company or a fund buys it outright.

Whoever launches the operation has to offer a price for all the shares, yours included. If it goes through, yours get exchanged for cash or for shares in the buyer, and you stop being a shareholder.

That price usually sits above where the market had the stock before the announcement: existing owners have to be persuaded to sell.

Three researchers, Betton, Eckbo and Thorburn, went through 6,886 takeovers of listed US companies between 1973 and 2002, and published the work in 2008 at the ECGI, a European institute that studies how companies are run.

The opening offer paid on average 44.5% more than the share was worth 41 days earlier, counting only the days the market opens: almost two calendar months.

The 41 isn't a round number: it's the exact day the authors fixed for measuring the price before anything about the deal was known.

That's why an acquisition announcement tends to push the price up sharply.

You'll see one of those cases in this chapter's third session, what a stock index is and what asset types exist. It covers the S&P 500, the index that gathers 500 of the largest companies in the United States.

One of those 500 stopped being listed because private equity firms bought it, funds that buy whole companies and take them off the market.

What listing costs the company

Listing costs control, privacy, and cash. Founders stop deciding alone. The accounts become visible to anyone, competitors included. And the banks handling the sale of the shares take a fee: in the United States it has run from 4% to 7% of the money raised.

That range was worked out by PwC, one of the world's largest audit firms, from the documents a thousand companies filed with the regulator when they listed. It published the analysis in January 2025.

The company has to put in writing what could go wrong

Every company that goes public has to publish that document the CNMV reviews, and it has a name: prospectus. The company writes it about itself, and by law it must list everything that could go wrong with it.

Digi's, from July 2026, laid out its risks one by one. It competes with three operators selling the same thing: Telefónica, Vodafone and MasOrange, born from the merger of Orange and MásMóvil.

It also warned that each customer leaves it less money than before, that it depends on its Telefónica agreements, and about its €646.4 million of debt as of March 2026.

It's all published, and it's free.

That prospectus runs past two hundred pages. It's in legal language, and nobody with a job reads it end to end before investing two hundred euros. Closing that distance between "it's published" and "I understand it" is the work Volatly does: taking what companies are required to publish and leaving it written in plain language.

The pressure of the quarter

The last cost doesn't show up on any invoice. A listed company answers for itself every three months, and that pushes some management teams to look at this quarter's number ahead of a five-year plan.

Four times a year, every listed company has to show its accounts. That is four days, one per publication, and those four together concentrate around a third of the whole year's price movement.

It was measured by research reported by the NBER, the National Bureau of Economic Research, a US organization that publishes economic research.

The chapter on earnings events is entirely about that moment, starting with why earnings move the price so much.

What to remember

• A share is real ownership, with rights to future profits and a vote, but you get paid last if things go wrong.
• The money reaches you two ways only: a dividend paid in cash, or reinvestment that may raise the share price.
• Limited liability sets your worst case: what you paid, not a euro more.
• A company goes public to get money it never repays, and pays for it in control, accounts on public view, and bank fees.

Related: how to read an income statement · what every trade really costs you · why most people lose money investing