Companies make money by selling products and services. If they sell well, they get profit. Bang, end of story, right? Where does stock price come in and why does it matter?
I do understand that during IPO the company basically sells stock, instead of product and services, and gets profit from that. But later on, when stock is just traded between people outside of company, why does its price matter **to the company?**
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Stock price matters to the company (not the shareholders, not the executives) because with a low stock price, it’s easy for another company to buy it and change everything, shut it down, etc. The company’s continued existence depends on a high enough stock price.
The other side of that coin is that with a high stock price, this company can be the one to gobble up the cheaper struggling ones.
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