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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Lots of good answers here already (about exec compensation), but i haven’t seen anybody mention the ability to leverage its own shares when trying to acquire a different company. If my company shares are valued at $100, and i can buy your company with my own shares, then that preserves my cash reserves for other things. If my shares were only worth $50, i have to give up more of my company to acquire yours.
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