eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

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eli5 why do companies with billions in the bank care about stock prices. Wouldn’t they be financially fine if the stock lost money?

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Companies can still raise money through new stock sales, so there’s that too care about.

But moreso companies are controlled by their board of directors. The board members are usually large stake shareholders, and they serve at the pleasure (they can be voted out) by other shareholders. So companies care about their stock price because the people controlling them make money through the stock.

Many privately held companies (companies not on the stock market) don’t care about their such prices because the owners don’t plan to sell shares soon.

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The company is run by the board, and the board serves at the behest of the shareholders.

Because of this the board will almost always do what’s in the best interest of the shareholders, not the employees, not the customers.

Since the shareholders own stock, the value of that stock directly translates to how much wealth the stock holders own.

A stock price dropping $1 can translate to millions of dollars lost in value for shareholder.

Stocks are also a measure of the business’ health. Think of stock price as a consequence, not a cause, of the company’s present situation