Shareholder vs Stockholder (Stocks vs Shares) Differences
There’s a slight difference between Stocks vs Shares. There’re two certificates that we see in terms of the ownership of the company/companies.
We call them the “certificate of stocks” and the “certificate of shares”.
- When an owner of equity maintains ownership for a particular company, we would 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 Example
Let’s take an example to illustrate this stockholder vs and shareholder
Let’s say that Mr. Treehouse has bought the certificates of Youth Inc. In this case, we will call the certificates as shares (and not stocks) since we can see that Mr. Treehouse has bought certificates from a “particular” company.
Now, if we say that Mr. Treehouse owns certificates from several companies, we would call them as certificates of stocks (and not shares).
That means, we can say that share is a smaller unit of stock.
Since a share is a particular certificate of a company, it can be issued in three ways –
- At par value: In this case, the share is issued at a meagre
- At premium: In this case, the share is issued at above the face value.
- At discount: In this case, the share is issued below the face value.
The shares can also be divided into two types – equity shares and preferred shares. As we know equity shareholders have the voting rights but are paid after debt holders and preferred shareholders. Preferred shareholders get the preferential rights and also get paid first (after the debt holders).
Since the stocks don’t mean the shares of a particular company, we understand stock as a generic term.
Stocks vs Shares Infographics
Below infographics details the top 5 differences between shareholder vs stockholder.
Key Differences Between Shareholder vs Stockholder
Here are the key differences between stocks vs shares –
- The stock is a generic term. When we mention stock, we say it like this – “the investor invests in stocks”. Share, on the other hand, is quite specific. When we mention share, we say it like this – “Mr. U has bought shares of Tea Shop Inc.”.
- The stock is a macro concept. And share is a micro concept. When we say stock, we cannot specify on 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.
- To a layman who doesn’t go in the intricacies, will understand stock and share as the same thing, because there’s not much difference.
- The stock is generic, thus cannot be used when we talk about types. However, in the case of shares, we can have two types of shares – equity shares and preferred shares. And in the case of shares, we also can how they’re issued. The shares can be issued in three ways – at par value, at a premium, and at discount.
Stocks vs Shares – Head to Head Differences
Here are the main differences between the stocks vs shares –
|The basis for comparison between shareholder vs stockholder||Stocks||Shares|
|Meaning||The stock is the larger form of a share.||Share is a smaller unit of stock.|
|Relationship with the owner||When 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.|
|Term||The 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.|
|Example||Mr A invests in stocks (this statement doesn’t require any further questioning).||Mr B has invested in shares (then the next question would in which company, how many shares, what type of shares etc.)|
|Macro & Micro||Stock can be compared to the automobile (industry).||Shares can be compared to the car (particular company).|
Stocks vs Shares – Conclusion
In simple terms, there’s a slight difference between stock vs share. And to most of the investors, it doesn’t make a huge impact. However, when it comes down to understanding both of these stock and share, 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. Plus, you will also be able to understand the nitty-gritty of equity shares and preferred shares.
However, the stock is all about understanding that an investor/group of investor has been into stock investment.
This has been a guide to top 5 differences between stocks vs shares. Here we take the differences between shareholders vs stockholders along with examples, infographics, and comparative table. You may also have a look the following articles to learn more –
- Stocks vs Bonds | Top 7 Differences You Must Know
- Share Repurchase / Buyback – Complete Beginner’s Guide
- Common Stock vs Preferred Stock | Top 8 Differences You Must Know
- Restricted Stock Units | Example | Tax | RSU vs Stock Option