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
Correct.
That said, stocks and stock options are typically part of an executive and other employee compensation packages, so they have vested interest in the stock price. Likewise, Board Members, theoretically representing shareholders, will not be happy with a per performing stock price and may elect to replace the executive team if the stock isn’t performing well.
There is also long history of companies, who are still very profitable, announcing layoffs/restructuring, essentially to meet shareholder/market demands to increase boost their profitability/stock price. Or in the case of companies like Apple, who are sitting on large piles of cash, announcing massive stock buy backs, to raise the price/value of their shares vs reinvesting the cash in product development, new ventures, or employee compensation.
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