If nobody buys the shares after the IPO then there is no demand and the market cap drops to zero. There’s no reward for the people who took the initial risk on the company and then what’s the point?
Ever heard of corporate raiding? A healthy stock price prevents hostile takeovers. It creates a class of emitionally invested citizens in the case of other external threats. It lets the public subsidize bonuses to employees (stock options) and in the case of a merger gives the company an asset that isn’t cash that can make up part of the compensation.
If nobody buys the shares after the IPO then there is no demand and the market cap drops to zero. There’s no reward for the people who took the initial risk on the company and then what’s the point?
Ever heard of corporate raiding? A healthy stock price prevents hostile takeovers. It creates a class of emitionally invested citizens in the case of other external threats. It lets the public subsidize bonuses to employees (stock options) and in the case of a merger gives the company an asset that isn’t cash that can make up part of the compensation.