5 ms·

Doesn't it give the company higher valuation and higher chances to attract more capital?

• acdanger 9y ago
  Yes. But isn't the IPO most often represent the biggest capital inflow of a company's life typically? How would any post-IPO debt issuance or sales of stock compare to the cash generated from the IPO.
  • didgeoridoo 9y ago
    Unless you're Apple, which raised about $100M in its IPO, and currently makes about $500M in revenue per day.
    • acdanger 9y ago
      That's not directly tied to their stock price though. Apple could suffer a corporate scandal tomorrow and their stock price could fall 20% and revenues could be largely unaffected. I just don't follow the reasoning that stock price enables resource allocation.
      • bandrami 9y ago
        It doesn't; you're exactly right. It's something people who hold for value (i.e. baseball cards or tulips) rather than for income (i.e. dividends, or what people used to hold stocks for for centuries) tell themselves.
• ryanx435 9y ago
  Sort of but not really. Companies can issue bonds if they want to raise large amounts of capital. Those are traded on a different market and are fundamentally different than stocks. They are debt instruments, not ownership.