What is the primary reason to issue stock?

The primary reason a company issues stock is to raise funds to expand the business. That may mean building more factories or stores, or developing new products, etc.

Issuing stock takes a company from being a private company to a public company, which has more regulations it must follow and reporting obligations to its stockholders.

An example of a company moving from private to public with an initial public offering of stock would be The Home Depot stores. The company was founded in 1978, and had just three stores in Georgia in 1981 when it went public and issued stock. Today, The Home Depot has over 2,200 stores in three countries. So going public was a big step forward for the company.

The primary reason to issue stock is to raise money that will make the company grow bigger. Stocks allow an investor to own a portion of a company. However, a stock is preferred when the stock must receive dividends.