Company share issuesĪ share issue is when a company releases new shares to the public. It’s important to note that share prices will come down when supply is greater than demand, and when more investors start to sell. Supply factors that affect share prices include company share issues, share buybacks and sellers. If supply and demand are just about equal, the share price is likely to move around in a narrow range for a while, until one of the factors outweighs the other. If more buyers move into the market, the demand grows and share prices go up – especially if there is limited supply. It’s all about the dynamic between buyers and sellers. This means, even if you think a stock is over or undervalued, the market decides what it’s worth. While it might appear that there are other factors at play, such as the health of the economy and company earnings, these are really just drivers of supply and demand. Supply and demand affects the appeal – and, ultimately, the price – of shares. How supply and demand affect share prices On the other hand, if supply is greater than demand, then the price will fall. Essentially, if more people want to buy a share than sell it, the price will rise because the share is more sought-after (the 'demand' outstrips the 'supply'). The main factors that determine whether a share price moves up or down are supply and demand.
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