The company is run by the board and CEO on behalf of the shareholders. The company doesn't need to benefit separately from the shareholders, it's just doing what it's supposed to do.
A higher stock price is nice to have when issuing stocks, since it's a cheaper way for the company to compensate execs and certain workers, but this isn't the primary purpose of stock or the main reason the company would want the price to go up.
The stock price should go up if and only if the expected value of owning the stock over the next few years* has went up. That could be because the company is "doing well" - maybe released a new product that's doing better than anyone expected, made an industrial process more energy-efficient, whatever. But it could be that they announced they're feeding all their employees into a blender and selling their blood to vampires and bones to werewolves - if that makes more money for the shareholders than whatever the company was going to do beforehand, the price still goes up.
*Really it's the lifetime value of owning the stock, but money you get in the future is worth less than money right now, until dividends ten years from now don't really matter. The "time value of money" is the concept that deals with this.
Like I said at the start, the traditional way of doing this is pretty easy to understand. Look at this chart. The squares with a D in them are when Exxon Mobile paid out a dividend. If you mouse over them, it'll say something like 0.87 - that means on that day Exxon sent a check for $0.87 to every shareholder (I mean... obviously if you have two shares you get $1.74 instead of two checks, but you know what I mean). A lot of companies (notably the big tech ones) don't do dividends anymore and use more convoluted systems, but this is the basic principle.
And if you own shares in a stock, you'll occasionally get mail from the company asking you to participate in the shareholder's meeting, telling you what the measures to vote on are, and giving you the board's recommendations for votes. Generally these are very low-participation though, since A - you can buy and sell votes, so some people have a lot more votes than you and B - shareholders generally are okay with whatever the board is doing, otherwise they'd put their money somewhere else.
How does a company benefit from its stock price increasing? because it can issue more stock at the higher price? are there are ways, too?
The company is run by the board and CEO on behalf of the shareholders. The company doesn't need to benefit separately from the shareholders, it's just doing what it's supposed to do.
A higher stock price is nice to have when issuing stocks, since it's a cheaper way for the company to compensate execs and certain workers, but this isn't the primary purpose of stock or the main reason the company would want the price to go up.
In a "properly functioning market" the stock price increase would be good only because it reflects that the company is doing better, right?
Not really?
The stock price should go up if and only if the expected value of owning the stock over the next few years* has went up. That could be because the company is "doing well" - maybe released a new product that's doing better than anyone expected, made an industrial process more energy-efficient, whatever. But it could be that they announced they're feeding all their employees into a blender and selling their blood to vampires and bones to werewolves - if that makes more money for the shareholders than whatever the company was going to do beforehand, the price still goes up.
*Really it's the lifetime value of owning the stock, but money you get in the future is worth less than money right now, until dividends ten years from now don't really matter. The "time value of money" is the concept that deals with this.
Ok, so the core of the stock value is because the stockholders can vote to provide themselves with the companies wealth, in some manner?
Yeah.
Like I said at the start, the traditional way of doing this is pretty easy to understand. Look at this chart. The squares with a D in them are when Exxon Mobile paid out a dividend. If you mouse over them, it'll say something like 0.87 - that means on that day Exxon sent a check for $0.87 to every shareholder (I mean... obviously if you have two shares you get $1.74 instead of two checks, but you know what I mean). A lot of companies (notably the big tech ones) don't do dividends anymore and use more convoluted systems, but this is the basic principle.
And if you own shares in a stock, you'll occasionally get mail from the company asking you to participate in the shareholder's meeting, telling you what the measures to vote on are, and giving you the board's recommendations for votes. Generally these are very low-participation though, since A - you can buy and sell votes, so some people have a lot more votes than you and B - shareholders generally are okay with whatever the board is doing, otherwise they'd put their money somewhere else.
thank you