Primary stocks refer to shares that are issued directly by a company to investors for the first time, usually through an Initial Public Offering (IPO). In the primary market, a company offers these stocks to raise capital for business expansion, debt repayment, or other operational purposes. The funds generated from selling primary stocks go directly to the issuing company, making it an important source of financing.

The process of issuing primary stocks often involves the assistance of investment banks, which underwrite the offering. They help set the initial price, market the shares, and determine the number of shares to be issued. Investors purchasing primary stocks are buying them at the IPO price, directly from the company, before they become available on secondary markets like the New York Stock Exchange (NYSE) or NASDAQ.

Investing in primary stocks can be both rewarding and risky. Since IPOs often generate significant public interest, they can experience substantial price volatility. The lack of historical trading data on these stocks adds to the uncertainty. However, early investors may benefit from price appreciation as the stock gets listed in secondary markets.

Once the primary stock is issued, future trading happens in the secondary market, where the stock price fluctuates based on market demand, company performance, and other economic factors.