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wildpitch_20 | How do companies benefit from their stock price? |
I realize that once they sell the stock they get the money from that transaction, but why would they care after they sold it whether or not the stock goes up? Like if they sell it for $30 then the person they sold it to sells it for $35 I don't see how the company would be any better off then if the person they sold it to at $30 sells it at $25. |
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Ken C
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Well a very good question. First the "Company" itself gains nothing on the buying and selling of the stock after it's issued. And you are right they already got thier money. The reasons they care are many, but I'll give you 3 examples:
1. The Director, Executives and Employees who own the stock, either in the form of options, restricted stock, or in the 401-K, have a great interest in the price as it will determine a good portion of their net worth.
2. If the Sock performs poorly, Investors in the Stock may vote to remove the Board of Directors, the Executives and others. And if your one of those, losing that job would be a devastating set back, and loss of income.
3. The first and foremost mission of Publicly Traded Companies, is to increase the Value of the Stock for the Shareholders. And again if it performs poorly, the big guys get ousted. |
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FLeabag
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The reason a company issues shares is that it needs to raise some money it needs to better itself. For example if you have a company that is worth $100 and you want to raise $100 more to buy new equipment, or upgrade a product. What is the best way to get people to give you the $100? You say that I will issue 100 shares, each worth $1. And the reason people will buy the shares is that they will be co-owners in your company, while realizing the potential of the idea you have for the future of the company. Say I bought 10 shares for a total of $10, what I now am is a 10% owner of your company, and as an owner (someone who gave you money) I would like to see my investment grow. Therefore, shareholders are owners of the company and the board (you)is responsible to run the business in a way that the owners make money. Also, as you were the principal owner of the company in the first place, you could have bought 51 shares of the company yourself (for $51). This gives you the major portion of the available shares, so that no one can buy more shares than you and take over your company. Now you have your own money on the line and you want your investment to grow. That is why some stock market gurus want to invest in companies where the insiders (or the board of directors) are major holders of the stock or are buying back more shares. The idea is that since it is their own money, they will be more responsible and make the right decisions to make their business grow. Also say in the future, you want to raise $200 more to buy some land to build another plant. You can issue more shares, but if your previous issue of shares went no where or down, why would more people want to buy those shares. So for the continued benefit of your company you want the shares once issued to go up. |
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skahhh
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In my opinion the companies/ managers of a company/ board of directors, care after they sell stock whether stock goes up if they want that value to be more or less. The company boys buy options and shares at opportune times to trade their shares for cash to buy their toys and houses. Also, stock is invested money in the company. The company uses that money as leverage to accomplish its goals as a company. That is why they had issued stock shares in the first place, to increase the borrowing potential to accomplish it's goals. Now if everyone sold their stock, the company would have no funds. If the company doesn't need money for anything they can do nothing and sit on their funds and the stock will not increase in value and they might use their present funds to just do what they need to do. I think corporate REITs work that way sometimes. Perhaps the company has enough capital from rents and such that they don't report to you and they just keep the money in a separate account? I noticed corporate REITs are not moving much. I think they want to discourage the average investor from making anything off them. Been flat since 12/29 in Metlife REIT fund and I checked the actual stocks and sure enough they are flat too. Somethin smells fishy. So sometimes if the companies don't need money, they can report bad stuff and lower share price til they buy in with their options, then have a big short runup and then cash in their shares making millions. I have to wait for that I guess or get out of mutuals altogether....which I might do. |
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Will M
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It benefits the company by giving them money and allowing them to pay of their debt |
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jeff410
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Just as you benefit from a larger net worth, the employees, including management, and the shareholders benefit from a higher stock price. |
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Heads up!
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They play with your invested money so it is in their best interest if people buy more. |
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bettyboopgirl
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The company benefits whether people sell or buy.
The production is in those selling and buying...
Trust me the company benefits per transaction that others are
doing. |
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