When do firms receive money from a stock sale in their firm and when do they not receive money?

A primary stock sale occurs when a company issues new shares of stock in the market for the first time, typically through an Initial Public Offering (IPO), or when they issue additional shares at a later date (also known as a follow-on offering). In a primary stock sale, the firm receives the money from selling these new shares, as investors buy the stock directly from the company. On the other hand, a secondary stock sale happens when existing shareholders (including the company's founders, employees, and early-stage investors) sell their shares in the company to other investors. In this case, the firm does not receive any direct financial benefits from the transaction, as the money goes from one investor to another.

Firms receive money from a stock sale when the sale is a primary stock sale. In an Initial Public Offering or a follow-on offering, the company issues new shares and directly receives the proceeds from the sale of those shares.

Firms do not receive money from a stock sale when the sale is a secondary stock sale. This type of transaction involves the buying and selling of existing shares among investors. In this situation, the company does not benefit directly from the money exchanged during the transaction. Instead, it is a transfer of ownership between investors. In conclusion, firms receive money from a stock sale when the sale concerns a primary stock sale (IPO or follow-on offerings), but they do not receive any direct financial benefits from a secondary sale, as the existing shareholders conduct the sale.