How does a company on the Stock Market make money?

Like let say Berkshire Hathaway.

Their market cap is something like $340 billion.

So, when I think about it. It gets a bit confusing.

Investors are buying, maybe one or two shares and hoping that they can earn a huge amount of money back from that.

Do the Board of Directors, use that $340 billion to help improve their business. Like would Apple.inc, use their market cap to help create more iPhones, iPads, etc.

But if they do use the money to help make their business bigger, they'd be taking money from the investors who are there hoping to make a profit from the stocks.

I realise and apologise for the fact that this sounds like an incredibly ignorant question.

You pretty much have it correct.

It's a constant concern to return enough profit to the business so it will thrive and pay the investors. A good board of directors will be looking at both. This is their task, to run the business so it does make enough profit that they can pay the investors a dividend.

Investing is risky, an investor knows going in that they may not make a profit and they may actually lose their investment if things don't go right. In start ups, it may be a few years before the board can pay the investors a dividend.

Market cap is unrelated to the amount of money that a company has for investment etc. It represents the value of the company's shares in the hands of its shareholders.

The company only receives funds from shares that are issued in its IPO and subsequent offerings. In the case of Berkshire Hathaway, for example, that is 'only' about $35 billion.

Companies don't make money from the change in market cap.

The answer is no, market cap has nothing to do with what the company has to spend or improve their business.

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