A share is a legal claim on a slice of a company.
- Own 1 of 1,000,000 shares — you own one millionth
- Shareholders are paid last: the whole risk, the whole reward
- Price × all shares = company size. £5 vs £500 says nothing
What this is about
A share is a legal claim on a slice of a company. Not a token, not a bet slip, not a number that goes up and down for its own reasons. Everything else in this Academy rests on that sentence, and a surprising amount of bad decision-making comes from quietly forgetting it.
What you get
Buy one share of a company that has issued 1,000,000 of them and you own one millionth of it. Concretely that usually means three things:
A claim on what is left. Not on the revenue, and not on the assets. On what remains after employees, suppliers, lenders and tax have been paid. Shareholders are last in the queue. That is exactly why shares can rise more than bonds — and why they can go to zero while the company's building still stands.
A vote, usually. One share, one vote, on the matters shareholders get to vote on. For most private investors this is close to theoretical; it matters here only because it tells you what a share legally is.
A dividend, sometimes. If the company chooses to distribute profit. Many profitable companies never pay one and reinvest instead. A missing dividend is not a defect.
Where the price comes from
The price is not set by the company. It is the last price at which somebody willing to sell and somebody willing to buy agreed — and nothing more.
That has an immediate consequence worth sitting with: the price already contains everybody else's opinion. When you buy because results looked good, you are buying from somebody who read the same results and chose to sell. You are not acting on information. You are disagreeing about what it means.
It also means the price you see is not the price you get. What is quoted is the last trade. What you will pay is whatever a seller is asking right now, and those differ — by very little in a large company, by a great deal in a small one. That gap is the spread, and it is covered in How fees and spread compound.
Ordinary vs the rest
The default is an ordinary share, and almost everything a private investor buys is one. You will meet two other words:
Preference shares sit ahead of ordinary shares in the queue for dividends and for whatever is left if the company is wound up. They usually carry no vote.
ADRs let you buy a foreign company on a US exchange through a bank that holds the real shares abroad. You get the economics; the mechanics, fees and tax differ from holding the share directly.
Neither is exotic, and neither is what you get by default.
What this does not tell you
It does not tell you the company is worth what the price says. Price is what the last two people agreed on. Value is a judgement about future profits. They are related, loosely, and over long periods. On any given Tuesday they can be strangers.
It does not tell you a lower-priced share is cheaper. A £5 share is not cheaper than a £500 one. What matters is the price against the whole company — the number of shares multiplied by the price, which is the market capitalisation. A company can split one share into ten overnight and nothing about it changes.
It does not tell you owning shares makes you an owner in any way you will feel. You cannot direct the company, and you almost certainly will not vote. The claim is real and legal; the influence is not.
It does not tell you that shares only go up. They have historically risen over long periods, on average, across whole markets. Individual companies fail completely and permanently, and "the market recovers" is no comfort to somebody holding the one that did not.
Where to see this in the app
Chart → Overview shows the market capitalisation beside the price. Compare the two for a company whose share price sounds high and one whose price sounds low, and the point above becomes obvious in about ten seconds.
Chart → Financials is where the claim you own is actually described: revenue at the top, and everything subtracted on the way down to the profit your slice has a claim on.
Portfolio records what you paid and when. Trades placed through the app are priced and timestamped by us and written to a log that cannot be edited later — so your own record of what you owned, and when, is not something anybody can tidy up afterwards.