When a stock price rises, does the company get more money?

4 Answers 4


Not directly. But companies benefit in various ways from a higher stock price.

  • Companies can and do issue "secondary offerings" - the company (and thus shareholders, indirectly) sells new stock for cash. Existing shares are diluted, but the company may be more valuable since it has more cash.
  • Companies can use their stock to make acquisitions or other deals. Higher stock price means fewer shares are paid for the same cash value.
  • Companies dilute shareholders by issuing stock compensation to employees, which shows up (these days) as an expense on the financial statements, lowering EPS to reflect the harm to shareholders. If the stock price is higher, fewer shares are needed to make employees happy.
  • A company with a high stock price is not as vulnerable to a takeover. In a takeover, shareholders might receive less than the company is worth. Though generally at least some parties will feel the takeover is a good deal that gives shareholders more than the company is worth - after all shareholders are getting more than the stock price.

One way a high stock price can hurt a company is that many companies do share buybacks when the price is too high. Economically speaking, a company should only buy back shares when those shares are undervalued. But, management may have incentives to do buybacks at irrationally high prices.

  • what about liability? Is there any correlation between the stock valuation and the amount of liability?
    – user1770
    Commented Apr 27, 2011 at 9:52
  • I can't think of a liability concern with a high price, unless the company obtained the high price by lying (illegally pumping up the stock).
    – Havoc P
    Commented Apr 27, 2011 at 13:37
  • It seems to me the first three bullet points are all the same. The company can issue new stock and benefit from it.
    – Daniel
    Commented Mar 9, 2020 at 10:02
  • @Daniel It seems to me folks generally prefer detailed answers over vague ones.
    – arkon
    Commented May 28, 2020 at 4:24

No. Not directly.

A company issues stock in order to raise capital for building its business. Once the initial shares are sold to the public, the company doesn't receive additional funds from future transactions of those shares of stock between the public.

However, the company could issue more shares at the new higher price to raise more capital.

  • 3
    There's usually (almost always?) headroom between the amount of shares the board is authorized to issue and the amount of shares that have actually been issued. For example, look at this old Apple 10K: "1,800,000,000 shares authorized; 835,019,364 shares issued and outstanding". That means that Apple has nearly a billion shares they could issue without seeking shareholder approval. A company like Apple is issuing new shares all the time (employee stock options, for example).
    – bstpierre
    Commented Apr 28, 2011 at 21:01
  • "The company can't issue more shares of stock to the public without consent, which is difficult if not impossible." - this is an understatement. Happens all the time.
    – NuWin
    Commented Aug 5, 2017 at 15:48
  • Edited the answer.
    – Mike Piche
    Commented Oct 14, 2017 at 11:16

Seems like no one in this thread has heard of "treasury stocks", which indeed allow a company to own and sell its own stock. Think about it. When there is a stock buy-back funded by excess profits, where does that stock go?

  • This could be a useful answer, but you've phrased it in the form of a comment on the other answers.
    – The Photon
    Commented Jun 25, 2014 at 1:27
  • 3
    Where does that stock go? It can go into treasury stock, in which case it can be re-issued (sold) later, but it also can simply be cancelled, in which case it does not go into treasury stock, it is simply destroyed.
    – user12515
    Commented Jan 16, 2015 at 3:48
  • Came here to post this.
    – quid
    Commented Aug 25, 2016 at 16:47
  • Treasury stock is a rather archaic concept. When a company buys back stock it is effectively the same as authorized but unissued stock and under most state laws the shares are just canceled increasing the number of authorized but unissued shares. It can be considered the inverse of selling shares.
    – doug
    Commented Aug 26, 2016 at 5:45

When a stock price rises, the company's assets are worth more. This doesn't mean it gets more cash directly, but it can liquidate (= sell) some of its stocks for a higher return than before.

  • 6
    I voted this down because I don't think it's accurate. The value of a company's assets do not depend on the price of it's stock. The inverse may be true... when the value of a company's assets rise, investors who follow the company may take notice, see that as a good business indicator, and want to buy more of the stock, which drives up the price.
    – Mike Piche
    Commented Apr 26, 2011 at 23:52
  • 2
    Also, a company does not "own" stock in itself that it can "sell". Doing so would mean issuing additional stocks which would dilute the existing shareholders' stake in the company. This is illegal without shareholder approval.
    – Mike Piche
    Commented Apr 26, 2011 at 23:59
  • 3
    @Mike Piche - what about companies that only issue, say, 10% of their available shares, retaining the rest? Then they certainly have "some of its stocks" that it can sell later.
    – warren
    Commented Apr 27, 2011 at 20:17
  • @warren: You're thinking about "authorized" versus "oustanding". For example, a company may have 1M shares "authorized", which is the amount the board is allowed to sell in the market. But that company may only have 100K "outstanding", which is the actual number of shares that exist. The other 900K shares don't exist, they aren't kept on the company's books, and they don't count towards assets.
    – bstpierre
    Commented Apr 28, 2011 at 20:56

You must log in to answer this question.