Follow the seller
When a company sells newly issued shares for cash, the financing can bring proceeds to the company and increase shares outstanding. When an existing holder sells its shares, the sale proceeds generally go to that selling holder instead. A single offering can include both types of sale.
Read the use-of-proceeds section
Check the prospectus cover, the use-of-proceeds discussion and any selling-shareholder section. These explain who is selling and who receives the money. Do not infer that the company receives the full stated offering amount merely because its name is on the document.
Registration and sale are different steps
A document describing shares that may be sold is not proof that all of them have already been sold. Check the language, dates and later company reports before treating a maximum offering amount as cash already received.
Check the related securities
If warrants or convertible securities are involved, read their terms too. Ask which shares already exist and which could be issued later. Then compare the financing information with the company’s latest financial statements and disclosures.
Source review
- SEC Investor.gov — Investing in an IPO: Selling Shareholders
- SEC Investor.gov — Using EDGAR to Research Investments
- SEC Investor.gov — Convertible Securities
Sources reviewed October 22, 2026. This guide is general education, not personalized investment advice or a recommendation to buy or sell any security.