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?**
In: 37
Stock price represents the value of the company (price per share x number of shares = total value of the company).
It matters to the company because a low share price makes it easier to buy more stock; thus the possibility of a takeover increases. Quite often this will be a hostile takeover by a competitor who wants to either take them out of the market or acquire certain things (IP, products, market share) and then get rid of the bits they don’t want either by selling them off or simply closing them down.
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