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?
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Lower stock prices can put you at risk of takeover.
Lets say this stock price drops to 2.00 a share. I can buy 51 shares, for 104, and effectively own the company.
Or if I’m a stockholder, and the price goes down, I might get upset. The stockholders generally elect the board of directors, who have the power to fire. So we can demand the Board of Directors fire upper management. If they refuse, the stockholders can elect a new board who will fire the upper management.
Its also just good for business. A growing company with a lot of value can use that to get loans, other companies want to work with them, etc.
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