My (possibly incorrect/incomplete) understanding is that if a pre-IPO company needs $1000, they can issue 100 shares for $10 each. If people outside the company actually buy all 100 shares at that price (which I think almost always happens), then the company gets the needed $1000. Thereafter, if the stock price becomes $15 or $2, how does it matter to the company? They’ve already received the $1000 they needed, right? Any subsequent trading isn’t actually generating money to run the company, right?
In: 8
It is literally the value of the boss’s investment. Since the 80s, the idea that companies primarily provide return on investment by turning a profit and returning that to owners as dividend has become somewhat old fashioned. These days, return on investment is often provided by share price increase.
And fundamentally what the boss wants – to make money – is what is important to the company.
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