As I understand it, once a company raises, say $5 billion in an IPO, the shares are sold and they get the money.
The shares are already with the public now. Why is it so important for public companies to grow their share price further every quarter? Why not focus only on the final profit margins?
In: Economics
Others have good answers on how shareholders can and wants to influence share price so I’m not gonna repeat it
The other reason is share issuance and buyback. For a variety of reasons (mainly taxes) companies have issued more and more shares and its derivatives, whether it is to raise more capital or as a part of employees’ compensation package (for both regulars and C-suits). And for similar reasons, they are also issuing more share buybacks instead of paying dividends.
Both of these are directly impacted by the market price of their shares.
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