People are confused about the stock price. People do think that the proprietor doesn’t care about their company stock price when it goes down, even It does not matter to the company. But this is not entirely true. If it doesn’t matter then why should we buy it? So let’s know how it is connected to the company.
What does stock price mean for a proprietor?
Everyone knows that even after the company has listed shares in the stock market, the proprietor still has some. You were headed that when the stock
falls or rises they impact the big industrialists. How is Mukesh Ambani’s wealth destructed when the market falls, And on the rise of this market, they are the top richest person in world list.
What does stock price mean for an organization?
The second impact comes above the company’s market cap. Adding all the
shares price of the company is called a market cap. The larger the market cap, the bigger the company. To calculate the market cap, multiplying the outstanding share by the market price of the company share. Who will invest in the company whose market capitalist is declining, If people are afraid of investing, then when the company needs money, how they will sell it at a fair price or how they pledge at a bank in good value? This is the reason whenever the company share goes below its intrinsic value, the company offers buyback to investors who holds their shares above the market trading price.
What does stock price mean for a shareholder?
The shareholders buy the shares of the company by looking at the growth potential of the company,
or share price trading under fair value to make good profit or wealth creation purpose. After selling the shares to you in the primary market, it runs the business with your investment. And whatever profit is made, he gives it to the investor in the name of the dividend. Some companies reinvest profits in business, which increases their potential to make more profit in the coming time. And as that profit increases, a lot of investors come to buy the same shares. But you are thinking, price volatility in the secondary market will impact directly to the company in the same day, it does not happen like this. Fear and greed of the people cause price volatility. The company does not have any direct impact due to the price movement in the secondary market in the short run. Yes, but in the long run its impacts the company’s goodwill.
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