Share
A share is a single unit of ownership in a company or financial asset, representing the smallest denomination into which a company's stock is divided. Owning shares entitles the holder to a proportional claim on the company's profits and assets.
The term 'share' and the term 'stock' are often used interchangeably in everyday conversation, but there is a subtle distinction worth understanding. 'Stock' refers broadly to the ownership instrument itself, while 'share' refers to a specific, individual unit of that stock. If a company has issued 1 million shares of stock, each individual unit is referred to as one share.
In practical terms, when an investor purchases shares of a U.S.-listed company — say, 50 shares of Tesla Inc. (TSLA) — they hold a precise fractional ownership of that corporation. The price of a single share is determined by supply and demand on the open market, and it can range from a fraction of a cent (in the case of penny stocks) to thousands of dollars per share, as famously observed with Berkshire Hathaway Class A shares, which have historically traded above $500,000 each.
Shares are divided into different classes that carry different rights. For example, Alphabet Inc. (Google's parent company) has Class A shares (GOOGL), which carry voting rights, and Class C shares (GOOG), which do not. This dual-class structure is not uncommon among U.S. technology companies and allows founders to retain control even after going public. FINRA monitors broker-dealer practices related to the purchase and transfer of shares to ensure fair dealing.
The total number of shares a company is authorized to issue is defined in its corporate charter and approved by shareholders. As observed during periods of corporate growth, companies may issue additional shares to raise capital — a process known as a secondary offering — which can dilute the ownership percentage of existing shareholders. Conversely, companies may repurchase their own shares (known as a buyback), reducing the total share count and potentially increasing earnings per share.
For educational purposes, understanding the distinction between authorized shares, issued shares, and outstanding shares is foundational to reading a company's balance sheet and SEC filings. The 10-K annual report, mandated by the SEC, discloses the precise share structure of every publicly traded U.S. company.