As far as I can understand :
Stock options are used to increase the capital of companies to realize some projects
Shares are divided into two categories :
o Free float (which is the part of shares important for my next question)
o Locked-in stock
For the free float, it’s easy to understand. Public investors can earn money by playing with stock prices. For the company it’s harder for me to understand. When a company wants capital to run projects, she can do an IPO. The initial price depending on the financial situation.
Question : What are the effects of the increase/decrease of stock prices after that IPO ?
For exemple : Initial stock price was 20 dollars and public investors paid 20 dollars which got into the capital of the companies. If stock price is now 25dollars, company won’t earn 5dollars more. So what’s the point for the company to be devalued after an IPO if she got the amount of capital she wanted ?
I saw only 2 easy solutions :
- If company wants to increase capital a second time, she needs to have a big value on the market to reduce the dilution of control.
- If company is too much devalued, she can be acquired by concurrents.
If company doesnt decrease too much and doesnt want to increase capital again, she has no point regarding the increase/decrease of her stock prices, right ?