A common stock is the one you’re most familiar with - having a share of ownership in a company.
Owning common stock in a company is a vote of confidence that an investor thinks the company will perform well, and grow. Owning common stock also entitles an investor to equity ownership in a corporation, voting rights, and shared participation in a company’s success through dividends and/or capital appreciation.
But a company’s fortunes could also go the other way, and a holder of common stock can endure losses. If a company goes bankrupt, holders of common stock are the last to be paid out, after bondholders and preferred stockholders.
As such, it is considered a riskier investment than owning debt or preferred shares.
What is a Preferred Stock?
What is the difference between Common Stock and Preferred Stock?