The stock share price is an important indicator of how a publicly traded company is performing. A rising share price means the company’s top brass is steering its operations in a profitable direction. It also means investors are happy with the company’s future prospects. When the share price falls, the company is in trouble and the board of directors may be inclined to fire top operatives.
In addition to the share price, a stock’s performance is also reflected in its earnings. Dividend payments, for example, are calculated according to a certain formula. The stock’s future earnings and dividend payments are forecasted, which will affect the share price. However, the stock’s share price will rise when there are more buyers than sellers.
Political events can also impact the share price. In 2016, for example, the election of Donald Trump affected the market negatively, but it rebounded quickly. Every politician has an agenda, and a change in government policy can affect the economy in a positive or negative way. For example, the tax cuts implemented by the Trump administration have been beneficial to the economy. This has boosted the earnings of many companies.
High share prices are also an indication of a company’s success. They attract positive attention from equity analysts and the media. This in turn attracts investors and thereby, provides an infusion of cash to the company.