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How a company benefits by having a higher market value?

by mansoor ali
(california, USA)




How a company benefits by having a higher market value? Do they have more operating cash by having a higher market value?

For example, A company has 100 million outstanding shares and being traded at $2 per share. So the market value is $200 million. If the stock price goes up to $3; the market value will increase to $300million; Now can the company benefit from extra $100 million ($300 million -$200million)? Is the entire $300M is in the bank? Can company have access to entire $300M?




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How a company benefits by having a higher market value?

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Jan 17, 2011
 Stocks Simplified Writes
by: Shaun

You have to remember that a lot of the stocks are exchanging hands between investors, so the company will not see a lot of the money. However they do benefit as the share price increases.

Say they just became public and had 100 million shares trading at $2. They sell 40 million shares on the open market and keep 60 million for themselves. This means they make $80 million dollars that they can use to invest into the business or whatever.

Now the stock goes up to $3 a share. Since they still own 60 million shares they have $180 million in assets. Just like stock owners they can choose to sell some of it, hold onto it, or buy more. But if the company does decide to sell their shares they have to remember not to sell too many of them otherwise they will not be the majority shareholder anymore and the company might get taken over by someone else who buys more shares.

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