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brookstyesterday at 5:55 PM3 repliesview on HN

Are you saying they would rather double stock price than double revenue?


Replies

Maxataryesterday at 6:27 PM

If you're someone who owns Microsoft, what option would you prefer?

1. Stock price remains the same but revenue doubles.

2. Revenue stays the same, but stock price doubles.

Assuming all else equal, and recognizing that this is absolutely a simplification, but if these were the two choices then it seems a no brainer that you'd go with option 2. Revenue is a means of increasing stock price.

show 2 replies
coldpieyesterday at 6:01 PM

Sure. Decision makers are paid in stock price, not revenue. They would rather do whatever increases the stock price the most, with the least effort/expense.

graemepyesterday at 6:01 PM

Yyes, and prefer it to doubling profit or cashflow etc.

I have not looked at MS in particular, but generally that is what the remuneration of the people at the top of most public companies is most strongly linked to.