Stocks vs Shares

Updated on April 4, 2024

Difference Between Stocks and Shares

The key difference between stock and shares is that stock is the broad term used more generally to represent a person’s ownership in one or more than one company in the market. In contrast, the term share is a narrow term used to represent a person’s ownership of a particular company in the market.

There’s a slight difference between Stocks and Shares. We see two certificates in terms of the ownership of the company/companies.

We call them the “certificate of stocks” and the “certificate of shares.”

  • When an equity owner maintains ownership of a particular company, we call it the certificate of shares.
  • And an owner of equity owns certificates of several companies; we would call it the certificates of stocks.

So, we can see that the slight difference is in the particularity.

Stocks-vs-Shares

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Example

Let’s say that Mr. Treehouse has bought the certificates of Youth Inc. In this case, we will call the certificates shares since we can see Mr. Treehouse bought certificates from a “particular” company.

Now, if we say Mr. Treehouse owns certificates from several companies, we would call them certificates of stocks.

That means we can say that shares are a smaller unit of stock.

Since a share is a particular certificate of a company, it can be issued in three ways –

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The shares can also be divided into two types – equity shares and preferred sharesPreferred SharesA preferred share is a share that enjoys priority in receiving dividends compared to common stock. The dividend rate can be fixed or floating depending upon the terms of the issue. Also, preferred stockholders generally do not enjoy voting rights. However, their claims are discharged before the shares of common stockholders at the time of liquidation.read more. As we know, equity shareholders have voting rights but are paid after debt holders and preferred shareholders. Preferred shareholders get the preferential rights and get paid first (after the debt holders).

Since stocks don’t mean the shares of a particular company, we understand stock as a generic term.

Stocks vs Shares – Video Explanation

 

Stocks vs. Shares Infographics

Stock-vs-Share

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Key Differences

  1. The stock is a generic term. When we mention stock, we say this: “the investor invests in stocks.” Share, on the other hand, is quite specific. When we mention shares, we say this: “Mr. U has bought shares of Tea Shop Inc..”
  2. The stock is a macro concept. And the share is a micro concept. When we say stock, we cannot specify a particular investment. But when we say share, we mean a particular company. For example, if we understand the difference between the automobile and the car, we would be able to understand the differences between stock and share.
  3. A layperson who doesn’t go into the intricacies will understand stock and share as the same thing because there’s not much difference.
  4. The stock is generic and thus cannot be used when discussing types. However, in the case of shares, we can have two types of shares – equity shares and preferred shares. The shares can be issued in three ways – at par valuePar ValuePar value is the minimum value of a security set and stated in the corporate charter or its certificate by the issuer when issued for the first time.read more, at a premium, and a discount. And in the case of shares, we can also show they’re issued.

Comparative Table

Basis for comparisonStocksShares
MeaningIt is the larger form of a share.It is a smaller unit of stock.
Relationship with the ownerWhen the owner owns the shares of several companies, we say that the owner owns stocks.When the owner owns the shares of a particular company, we say that the owner owns shares.
TermThe stock is a generic term. When an owner owns stocks, we can’t specify them as shares of a particular company.Share is a specific term. When the owner owns shares, we can ask about a particular company.
ExampleMr. A invests in stocks (this statement doesn’t require further questioning).Mr. B has invested in shares (then the next question would be in which company, how many shares, what type of shares, etc.)
Macro & MicroStock can be compared to the automobile (industry).Shares can be compared to the car (particular company).

Conclusion

When it comes down to understanding both these stocks and shares, understanding shares is more important than stocks. Understanding shares will help you understand the meaning of par value, the face value of the shares, and also what issued at a premium and issued at a discount means. You will also be able to understand the nitty-gritty of equity and preferred shares.

However, the stock is all about understanding that an investor/group has been into stock investment.

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