Why would a company be bothered by having a lower stock price?

I wonder why a compagny cares if their stocks having a lower value than its IPO.
I mean if they got decimated, a buy back at a lower price would be great to them not?

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If the market prices a stock below what the company believes is its fair value, that’s a good opportunity to buy back stock, yes. On the other hand, a company’s board is usually there to serve the interest of shareholders, so a share price taking a nosedive after an IPO doesn’t look good. Also, often company employees are compensated (party) with stock in order to retain top talent. If the stock price drops, that can reduce the effectiveness of this retention tool.

And let’s not forget that if the stock price sinks too low, another company could buy up the stock in a (hostile) takeover move.

Most companies that trade below IPO right now do not have positive earnings. Therefore, they won’t do buybacks. Lower prices can be dangerous for the company if they still need capital. Diluting shareholders at low prices is not what you want to do.

I understood that before an IPO the company gets hyped to ensure the initial investors get more return for their investment.
Then at the moment of the IPO, or a short while later, the initial founders sell their stocks which causes the price to go down.
So basically for us as investors it would be better to wait for that drop and then buy if you think it is a good company

Just to mention, with my question i did not mean right after their IPO.
I just meant at any given time having a lower value than their IPO could have been positieve for buy backs.

But it seems there is more to it and the replies so far shed some light on this :slight_smile:

Edwin, dutchie living in fr.