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Well lets say a company is planning a big investment and suddenly stock value dropped like stone. I think that can be very dangerous because suddenly you have t

by ohwp 14y ago

Well lets say a company is planning a big investment and suddenly stock value dropped like stone. I think that can be very dangerous because suddenly you have to rethink your strategy.

wtvanhest 14y ago
The stock price doesn't effect the company, the company's actions, products and more importantly future prospects influence the stock price. "To me It seems that stock has almost no relation with the company anymore. It's a game of buy and sell that is dangerous for a company." Unless the company needs to raise additional capital, which apple does not, the stock price cannot be dangerous for the company. "Apple lost a load of money within hours. I don't think there will ever be a company which is flexible enough to handle changes in value that fast." Apple's shareholder's lost money within hours. The company is still profitable. "So I think this is good for Dell. Breaking free of shareholders who just play the money game." You may be right, private companies can change management incentives to be longer term rather than stock price based which can allow for high risk, long-term strategies. We won't know for several years until the company goes public again (assuming the deal closes).
- jtbigwoo 14y ago
  Unless the company needs to raise additional capital, which apple does not, the stock price cannot be dangerous for the company. I don't think this is true anymore. Discussion of executive performance these days starts with stock price (and often ends there.) Executives are encouraged by shareholders and the business media to prioritize short-term stock prices over long-term growth. It can be hard to overcome that bias, especially when executive compensation is usually tied very closely to stock price.
  - wtvanhest 14y ago
    I was extremely careful with my words, notice that I said "company" not "executives" (similar to OP). It isn't dangerous for executives either but it may influence them to manage earnings or attempt short-term cuts, both activities are usually detected by investors and lead to no price action or lead to negative price action.
josephagoss 14y ago
If Apple is planning an investment, they really don't need to worry about their own share price. They have over $100 billion and can do what they want. Apple is so far removed from needing its share price to be high that they don't care. I think when it gets too low they buy their own stock thus destroying it and adding more value to the current shareholders. I think if the shares were higher they might be able to entice future employees perhaps, but they have so much money, they could have even paid Tim Cook billions in cash and it would be rounding error.
k-mcgrady 14y ago
If you're planning a big investment and the stock value drops significantly it's probably a sign you shouldn't be making that investment. A company's stock moves based on what investors think the company is going to do. Apple's value has dropped slightly recently because investors aren't aware of any big products in the pipeline.

by ohwp 14y ago

Well lets say a company is planning a big investment and suddenly stock value dropped like stone. I think that can be very dangerous because suddenly you have to rethink your strategy.

wtvanhest 14y ago

The stock price doesn't effect the company, the company's actions, products and more importantly future prospects influence the stock price. "To me It seems that stock has almost no relation with the company anymore. It's a game of buy and sell that is dangerous for a company." Unless the company needs to raise additional capital, which apple does not, the stock price cannot be dangerous for the company. "Apple lost a load of money within hours. I don't think there will ever be a company which is flexible enough to handle changes in value that fast." Apple's shareholder's lost money within hours. The company is still profitable. "So I think this is good for Dell. Breaking free of shareholders who just play the money game." You may be right, private companies can change management incentives to be longer term rather than stock price based which can allow for high risk, long-term strategies. We won't know for several years until the company goes public again (assuming the deal closes).

jtbigwoo 14y ago
Unless the company needs to raise additional capital, which apple does not, the stock price cannot be dangerous for the company. I don't think this is true anymore. Discussion of executive performance these days starts with stock price (and often ends there.) Executives are encouraged by shareholders and the business media to prioritize short-term stock prices over long-term growth. It can be hard to overcome that bias, especially when executive compensation is usually tied very closely to stock price.
- wtvanhest 14y ago
  I was extremely careful with my words, notice that I said "company" not "executives" (similar to OP). It isn't dangerous for executives either but it may influence them to manage earnings or attempt short-term cuts, both activities are usually detected by investors and lead to no price action or lead to negative price action.

josephagoss 14y ago

If Apple is planning an investment, they really don't need to worry about their own share price. They have over $100 billion and can do what they want. Apple is so far removed from needing its share price to be high that they don't care. I think when it gets too low they buy their own stock thus destroying it and adding more value to the current shareholders. I think if the shares were higher they might be able to entice future employees perhaps, but they have so much money, they could have even paid Tim Cook billions in cash and it would be rounding error.

k-mcgrady 14y ago

If you're planning a big investment and the stock value drops significantly it's probably a sign you shouldn't be making that investment. A company's stock moves based on what investors think the company is going to do. Apple's value has dropped slightly recently because investors aren't aware of any big products in the pipeline.