How does a company increase the value of their stock/share price while not selling stock to outside investors?
What are the ways to do this? Are there any conditions to where a strategy like this not increase the stock price?
Public Comments
- If this is a privately owned company the only way they can increase the price that someone else is willing to buy them is create more equity in the company by making more profits. The share price is only worth what someone is willing to pay them for it.
- It is based on an internal rate of return of all the Retained Earnings minus reinvestments divided by the total number of shares. This is unregulated, of course and while some companies set their target at 10% per year by varying the reinvested RE, others fix their reinvested RE and allow the investor return to vary. In spite of being unregulated, you still have a contract with the corporation, a contract whose conditions are spelled out in the prospectus. Granted, you will not be allowed to audit the books. In addition, it is unlikely that you will get voting rights.
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