What are Share Prices?

Share prices are current prices of shares that one can purchase from the different companies participating in the share market. Share prices vary from one company to another.

Share prices may indicate how companies are doing and how external markets and investors view the performance of the companies. If business is doing well for some companies or perceived as such, then share prices would definitely go up. Otherwise, share prices would fall down.

Despite these market indicators, share prices alone do not give conclusive insight on how businesses are performing. Investors must also understand the underlying context of share activities in the stock market.

What Affects Share Prices?

There are varied internal and external factors affecting the share prices in the stock exchange.

Internal Factors

Companies issue dividends to their shareholders. It has been a common practice for some that after the exchange date, share prices drop in the same value as the dividends paid to the company shareholders.

Another factor that affects share prices is share bonuses that some companies give to their shareholders. Share bonuses are given in place of cash dividends. After share bonuses are given out, share prices tend to drop in proportion to the bonuses issued.

Companies also give out warrants exercise to their existing shareholders. Warrants give shareholders the privilege of purchasing shares in their respective companies at a predetermined date and specified share prices. Share prices drop in proportion to the number of exercised shares.

External Factors

Share prices may be directly affected by various factors that may be beyond the control of the companies trading on the stock exchange.

Share prices are directly affected by the current trend of stock market trading. When more investors buy shares in a company, share prices would consequently go up. On the other hand, when investors are selling shares and stocks, stock and share prices would fall down. Competitor activities may also affect share prices.

How the media, economist and analysts perceive the market have huge impact on the share prices. Positive perception of the trading activities on the stock exchange may produce favourable outcome, wherein more investors will have confidence to invest in stocks and shares. This would eventually translate to the increase in share prices. Negative reviews or comments may also pull down share prices on the exchange. However, negative or positive perception may not always result in the anticipated outcome.