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
At that point, the value of the stock matters to the *owners* of the company — the shareholders. Owning a share means owning a piece of the company, which entitles you to vote on certain things like the board of directors to guide the company. Minor shareholders rarely vote, but the major ones do and they tend to vote for policies which increases the value of their investment.
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