What effect does the market highing and shorting a specific company's stock have on that company?

[RandomPoster]

Let's say there is a company with stock valued at $100 a share. A large collection of investors keep buying up all their stock, jacking up the price, then dumping it. If they were able to keep doing this over and over again, what effect would it have on the company if their stock, which would normally be valued at about $100 a share kept roller-coastering to between $5 and $600 a share? Would it benefit or harm the company? Would it have any effect at all?

 

[Dekster]

It would get the investors looked at for securities fraud and the company would have to tread very lightly to keep from getting pulled into the investigation as well. It damages the reputation of the companies and would probably keep them from being able to do any future IPO's to raise additional funds to expand. I doubt they would be able to drive a company's stock that low below value though. If they did, the company would have a very huge motive in going private.

 

[Polishprince]

It could help the company if the price of the stock soared, if they needed to raise more capital. If they could issue more stock , when the price is high it would seem preferable to issuing bonds.