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
Well, stock price matters to owners. Executives often also own stock of the company and even if they do not, if the owners aren’t happy, soon the executives are looking for a new job.
For the company stock price matters because it influences future investments, if the company has low valuation, it has difficulties raising more money and is susceptible to being bought out by competition.
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