Newbie: what if my share ...

đź“Š Investing
1

Hi,

I’m new to this and want to ask:

In the case the I buy a share and its price goes down to 0: do I lose the share (or the position, not sure how it’s exactly called)? Or do I still have the share even if it’s worthless?

Because I’d still keep the share in case it gets back to a higher value

Thanks

2

Hi @sabin.marcusan welcome to the forum.

You own the shares regardless of their value. Even companies that are going bust tend to have their shares valued at 1p etc.

3

If the share price goes to zero this means the company has no equity and will need to issue more shares to raise further funds, it doesn’t mean the company is being liquidated (unless this is announced ofcourse)

4

Untrue regarding the “no equity” part, some companies do have more liabilities than assets, hence a negative theoric value of their share, yet still trading at a price.

If a company goes bust, you do keep the share, and it will more likely still have a “price” (a few cents at most) ; but the company will get delisted, meaning you won’t be able to trade the shares anymore, and if the company gets liquidated, you will own share of a company that doesn’t exist anymore.
Chances of recovering any money during the liquidation is very low ; although that process would mean repurchasing all outstanding shares with the remaining equity, it is likely that if the company gets liquidated, it cannot afford to pay all of its debt in the first place, meaning no equity left for shareholders.

5

There’s a difference between “trading equity” and “share price equity”, a company can still trade with a zero value and in some instances be below zero.
It’s down to investors to buy up a new allocation of shares issued by the company.

Many companies are valued high even with negative assets due to liquidity of the cash assets, this allows them to trade out of a hole it does not mean the “share value” is worthless.
A company that has its share value fall to zero has no shares remaining valued above zero this does not mean the company has no valuable assets just that no one is currently paying for them