A public company, also known as a publicly traded company, is a corporation whose ownership is dispersed among the general public in many shares of stock which are freely traded on a stock exchange or in over the counter markets.
These companies are subject to regulations and must meet certain transparency requirements set by the security exchanges and market regulators where their shares are traded. For example, in the United States, public companies must file certain reports, including annual and quarterly reports, with the Securities and Exchange Commission (SEC).
The primary advantage of being a public company is the ability to raise capital through the sale of shares. However, this comes with increased regulatory oversight, higher costs for compliance, and the requirement to disclose financial and business information that could be useful to competitors, which could be viewed as disadvantages.
Notable examples of public companies include Apple Inc., Amazon.com Inc., Microsoft Corporation, and many others that are listed on stock exchanges around the world.
Example of a Public Company
Let’s take the example of Apple Inc., a well-known public company.
Apple Inc. was founded in 1976 and initially went public on December 12, 1980. The initial public offering (IPO) price was $22 per share. Anyone who purchased Apple’s shares during the IPO and held onto them would now own stock that has split several times and significantly increased in value.
As a publicly-traded company, Apple is required to follow the rules set by the Securities and Exchange Commission (SEC). This includes filing regular financial statements, like 10-Qs (quarterly reports) and 10-Ks (annual reports), and making them publicly available for anyone to view. This level of transparency allows potential investors to evaluate Apple’s financial health and operational performance when making investment decisions.
Apple’s shares are listed on the NASDAQ Stock Market and can be purchased by any individual investor, mutual fund, or other institutional investor. The value of Apple’s stock fluctuates based on various factors, including the company’s financial performance, overall trends in the market, and investor sentiment about the tech industry.
In addition to offering shares, Apple also pays dividends to its shareholders, providing them with a return on their investment beyond any potential appreciation in the stock price.
Please note that while investing in public companies can provide financial gain, it also carries risk. Always perform due diligence or consult with a financial advisor before making investment decisions.