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I think the reasoning is that divesting can reduce demand for a stock. Thus reducing the stock price, and reducing the future financing capacity of the company.
by pouetpouet 9y ago
I think the reasoning is that divesting can reduce demand for a stock. Thus reducing the stock price, and reducing the future financing capacity of the company.
- maxlamb 9y agoThe only financing that happens with a stock is at the point of IPO, which is obviously not applicable for these ancient oil companies. I'm not sure an oil company has issued more outstanding shares for financing in a very long time. They get the vast majority of their financing through low-interest debt.
- sokoloff 9y ago> The only financing that happens with a stock is at the point of IPO False. Companies make secondary offerings for acquisitions or other purposes as well as issuing shares as part of employee/executive compensation.
- sunsu 9y agoPublic companies can issue more stock to public markets at any time. That stock would be priced at the market rate. If a company’s stock price tanks due to lack of demand, that is bad for the company. Similarly, companies with failing stock prices have problems attracting (and bleeding) talent.
- slavik81 9y agoDoes it do that, though? I find it hard to believe divestment would have much long term effect on stock price. The value of a stock stems from the the company's profits and those remain unchanged. In a competitive market, no player has market power, and stocks seem pretty competitive.