What Is the Difference Between Stock and Share?

The difference between stock and share is minor. That is why it is often overlooked by beginners. On the one hand, both terms are interchangeable, as they refer to the same thing despite purposes and intents. On the other hand, shares vs stock are distinct as soon as it comes to legal accuracy and syntaxis.

In this article, we will clarify the difference between share and stock with examples to support the main idea and the way investors’ ownership of the company can be described in a simple way.

Shares vs Stock

To make things a bit easier right from the start, we need to have a closer look at a stock and share difference, as they appear to be the main point for beginner investors’ confusion. The key difference is that stocks introduce a broader concept if compared to shares although both describe specific units of ownership in the company:

• Stocks introduce securities that provide a stockholder with ownership in a corporation. When you decide to buy a stock, you buy a percentage of its possession instead of lending money. As a result, you have the right to receive earnest, dividends, and assets using the company’s resources.
• Shares are a part of a stock. It comes as an individual unit saying that one has invested in a corporation and owes a small portion of it. For instance, if you have 100 shares of Microsoft, you specify the exact number of units that represent your ownership of Microsoft. Those portions can be either small or big.

In other words, shares indicate the exact size of investments while stock appears to be a broader concept that can be specified only with the help of shares.

Example: you can say either “I have a stock in Tesla” or “I own three shares of Tesla”.

“Stake” Term Definition

“Stake” is another term to consider when clarifying the difference between stock and share. It shows the amount (not a number) of stocks one owns in a company. In other words, stake highlights the exact percentage of stock you possess in a corporation.

On the other hand, this term does not refer only to stocks. It can be used in another context as well. It is a general term used to describe partial ownership.

Example: let’s say, you decided to team up with a partner and invest in stocks. Both of you have a specific percentage of ownership, which means both of you own property even without having a formal stock structure.

Other stake examples can represent a part of a business that ate provided by the company in exchange for investment.

The Bottom Line

The difference between stock and share is hard to detect for beginner investors. The two terms are often considered interchangeable confusing amateurs. However, they are distinct when it comes to describing the type of ownership in the company you choose for investment. While shares describe a small but countable unit of ownership, stocks represent a broader understanding of an investor’s possessions that can be converted into earnings or dividends.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.