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
Even the CEO of a company has a boss, that boss is the owners of the company. The company owners care about the share price, therefore the CEO cares about the share price.
There’s lots of additional reasons, such as stock compensation and so on. But the core and real reason is that the company cares because the owners care and the company cares about what it’s owners care about.
Latest Answers