Difference Between Shares and Stocks

"Shares" specifically represent ownership in a particular company or financial instrument, whereas "stocks" is a broader term that can refer to ownership in one or multiple companies, a collection of investments, or an entire portfolio.
Difference Between Shares and Stocks
3 mins
21-March-2025

Shares and stocks are often used interchangeably, but there’s a subtle difference. Shares represent specific ownership in a particular company, like owning 10 shares of Infosys. Stocks, on the other hand, is a broader term indicating ownership in one or more companies. So, owning stocks may mean you hold shares across multiple businesses.

Key takeaways

  • Stock represents ownership in a company.
  • Shares are the divisible units of that ownership.
  • The aggregate of all shares constitutes the company's stock.
  • Individual shares are fractional components of the overall stock.
  • Possession of 100 shares signifies ownership of 100 units of the company's equity.

When an individual decides to begin stock trading, he/ she must first be aware of the differences between shares and stocks. In many countries, people may use these terms interchangeably. While it is true that both terms denote ownership in a company, there are minor differences between these terms.

Stock is a broad terminology used to denote a unit of ownership in one or multiple companies. However, the term share indicates a person's stake in any company in the market.

The following sections of this blog will explore the key distinctions in the “Shares Vs Stocks” debate, helping you understand how these terms are used in different investing contexts.

What is a stock?

Generally, when a company seeks to raise capital, it issues stocks or borrows money. Stocks are financial securities representing ownership in corporations. To be precise, when a person buys stocks, they buy a percentage of a company’s ownership.

Investors can receive their stocks’ dividends, which depend entirely on the company’s earnings and profits. Usually, people receive dividends monthly, quarterly, or annually from their investments. Dividends are declared after approval from the company’s board of directors.

What is a share?

The smallest denomination of a particular company’s stock is called a share. In other words, the stocks of a company get divided into shares, i.e., a unit of a stock is a share.

Suppose a company has 1 lakh shares. An investor holds 100 shares of the company. It means that the investor owns stock equal to 0.1% of the company’s total stock. Here, a share stands for a single unit of the stock.

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Difference between shares and stocks

This section will highlight the share and stock difference, helping investors grasp how each term is used and what it represents in the context of ownership and market terminology:

Feature

Shares

Stocks

Definition

Shares, on the other hand, are individual units of stock. Each share signifies a specific portion of ownership in a single company.

 

Stocks represent part ownership in a company or multiple companies. They are financial instruments indicating an investor's stake in one or more organisations.

Denomination

Two different shares may not have the same value. Two stocks can have different values.

Generally, stocks of a company are considered equivalent in value.

Nominal value

Shares are associated with a nominal value.

Stocks do not have a nominal value associated with them.

Possibility of original issue

Shares do not involve the possibility of an original issue.

There is always a possibility of an original issue for stocks.

Paid up value

Shares may be partially or fully paid.

Stocks are typically fully paid up.

Scope

Shares have a narrower scope, representing ownership in a specific company.

Stocks have a broader scope, representing ownership in a sector or the entire market.


Additional read
What is share market

Types of stocks

Listed below are different types of stocks:

1. Large-cap stocks

Stocks of reputed and established companies with substantial amounts of cash at their disposal, are referred to as large-cap stocks.

2. Mid-cap stocks

Stocks of medium-sized companies are called mid-cap stocks.

3. Small-cap stocks

These stocks belong to small companies with low market capitalisation.

4. Common stock

Represents an ownership stake in a company, affording shareholders the right to vote on key decisions and potentially receive dividends. However, common stockholders stand last in line for company assets in the event of liquidation.

5. Preferred stock

Exhibits characteristics of both equity and debt.Although it typically lacks voting rights, preferred stockholders hold a higher claim on a company's assets and earnings compared to common stockholders. Dividends for preferred stock are usually fixed.

6. Growth stocks

Belong to companies poised for above-average growth in revenue, earnings, and cash flow. These stocks often prioritize reinvesting earnings into the business rather than distributing dividends to investors.

7. Blue-chip stocks

Denotes shares of large, well-established companies known for financial stability and reliability. Blue-chip stocks are often considered safer investments, having demonstrated a history of consistent performance.

Types of Shares

One can categorise shares into two types:

1. Equity shares

Companies issue equity shares to raise capital. These shares can be further categorised into authorised share capital, issued share capital, and others.

2. Preference shares

Preference shares enable the owners to receive preference over equity shareholders at the time of capital reimbursement and dividend distribution.

Benefits of investing in stocks and share

Here are the benefits of investing in stocks and shares:

  • Investing in stocks ensures portfolio diversification
  • Stock investments are a good source of dividend income which helps to grow a substantial corpus
  • One can liquidate stocks with ease
  • Stocks hold the potential to generate high returns over a short time

The primary risks of investing in stocks are as follows:

  • Market risk- Stock prices depend on supply and demand in the market. It is subject to daily fluctuations
  • Company risk- Stock prices can fall if the company undergoes financial problems
  • Liquidity risk– A company facing liquidity/ solvency problems may find it difficult to repay debts and may not generate dividends

Common misconceptions about stocks and shares

The terms "stocks" and "shares" are often used interchangeably, but there are some key distinctions and misconceptions to clear up for new investors. Here's a breakdown of some common misunderstandings:

  1. Stocks and shares are different things: While they are closely related, there's a subtle difference between shares and stocks. A share represents a unit of ownership in a company. When a company divides its ownership into tradable units, each unit is called a share. A stock, on the other hand, refers to a collection of shares issued by a single company on a stock exchange. So, you can think of a stock as a type of share, but not all shares are necessarily stocks.
  2. You need a lot of money to invest: This isn't entirely true. Many online brokerage platforms allow investors to start with small amounts and invest fractional shares of companies. This makes the stock market more accessible than ever before.
  3. Investing is guaranteed to make you rich: This is a dangerous misconception. Stock prices can go up and down, and there's always the possibility of losing money. Investing should be viewed as a long-term strategy for wealth creation.
  4. Only publicly traded companies have stocks: Not all companies offer stocks. Private companies are not listed on stock exchanges and their ownership is not divided into tradable shares. Only publicly traded companies have stocks available for purchase by the general public.

Understanding these common misconceptions can empower you to approach stock market investing with a more informed and realistic perspective.

Additional readDifference between stocks and ETFs

Conclusion

The terms shares and stocks are often used interchangeably, but there’s a slight distinction. “Shares” generally refers to units of ownership in a specific company, more commonly used in the UK. “Stocks” is a broader term, popular in the US, that refers to ownership across multiple companies or one’s portfolio. The share and stock difference depends largely on geography, context, and whether the reference is company-specific or general.

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Frequently asked questions

Are shares and stocks the same?

Not exactly. Shares refer to specific units of ownership in a single company, while stocks is a general term indicating ownership in one or more companies.

Which is better, share market or stock market?

Both refer to the same marketplace for trading company ownership. “Share market” focuses on individual units, while “stock market” has broader usage.

Does 1 stock equal 100 shares?

No. One stock refers to a company, while shares are its divisible ownership units. There’s no fixed ratio like 1 stock = 100 shares.

What is 100 shares of stock called?

It’s simply referred to as “100 shares of stock” or a holding of 100 shares. There’s no unique term for this quantity.

How many shares is one stock?

A stock isn’t a countable unit; it represents a company. The number of shares depends on how that company’s ownership is divided.

Which is bigger, stock or share?

No. One share represents a unit of ownership in a stock (company), not the entire stock itself.

Is 1 share equal to 1 stock?

No. A stock represents the company, and you can own multiple shares of a single stock. So, 1 share doesn't equal the whole company, but it grants you ownership rights proportionate to the number of shares you hold.

Are share market and stock market the same?

Yes. Both refer to the marketplace for buying and selling equity. "Share market" focuses on individual shares, while "stock market" is a broader term.

Which is a good stock market or share market?

Both offer solid investment avenues. The share market suits those targeting specific companies, while the stock market suits broader, diversified investments.

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Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

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UPI, Wallet, Loans, Investments, Cards, Shopping and more

Standard Disclaimer

Investments in the securities market are subject to market risk, read all related documents carefully before investing.

Research Disclaimer

Broking services offered by Bajaj Financial Securities Limited (BFSL) | Registered Office: Bajaj Auto Limited Complex , Mumbai –Pune Road Akurdi Pune 411035 | Corporate Office: Bajaj Financial Securities Ltd,1st Floor, Mantri IT Park, Tower B, Unit No 9 & 10, Viman Nagar, Pune, Maharashtra 411014| CIN: U67120PN2010PLC136026| SEBI Registration No.: INZ000218931 | BSE Cash/F&O (Member ID: 6706) | DP registration No : IN-DP-418-2019 | CDSL DP No.: 12088600 | NSDL DP No. IN304300 | AMFI Registration No.: ARN – 163403|

Research Services are offered by Bajaj Financial Securities Limited (BFSL) as Research Analyst under SEBI Regn: INH000010043. Kindly refer to www.bajajfinservsecurities.in for detailed disclaimer and risk factors

This content is for educational purpose only.

Details of Compliance Officer: Ms. Kanti Pal (For Broking/DP/Research)|Email: compliance_sec@bajajfinserv.in/Compliance_dp@bajajfinserv.in |Contact No.: 020-4857 4486 |

Investment in the securities involves risks, investor should consult his own advisors/consultant to determine the merits and risks of investment.