So my question is that apart from buying, selling and company net profit or net loss what are the other factors that determine the rise and fall of a company’s share price.
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So my question is that apart from buying, selling and company net profit or net loss what are the other factors that determine the rise and fall of a company’s share price.
First… Share price is not controlled by one thing. It is controlled by expectation about the future. Not just what is happening now. Let Me Explain With a Simple Story Imagine Baba Musa owns a yam farm. Today, his farm is doing well. But suddenly people hear that: • next year there may be drought •Read more
First…
Share price is not controlled by one thing.
It is controlled by expectation about the future.
Not just what is happening now.
Let Me Explain With a Simple Story
Imagine Baba Musa owns a yam farm.
Today, his farm is doing well.
But suddenly people hear that:
• next year there may be drought
• or fertilizer price will rise
• or government may ban export
Even if his farm is still producing well today…
People may start offering lower prices for his farm.
Why?
Because they are thinking about the future.
That is exactly how the stock market works.
Oya… Let’s Break Down the Real Factors
Apart from buying/selling and profit/loss, here are the major forces:
1. Future Expectations (VERY POWERFUL)
This is the biggest driver.
If investors believe:
• the company will grow
• expand
• increase revenue
Price goes up.
Even if current profit is small.
If they believe future will be bad…
Price falls — even if current profit is good.
2. Interest Rates (Central Bank Decisions)
When interest rates rise:
• borrowing becomes expensive
• businesses may slow down
• investors move money to safer assets
So stock prices may fall.
When rates fall:
• businesses grow easier
• investors prefer stocks
Prices may rise.
3. Inflation
If inflation is high:
• cost of production increases
• consumers buy less
• company profit may reduce
So investors adjust prices downward.
4. Government Policies & Regulations
New policies can change everything overnight.
Examples:
• new taxes
• import bans
• subsidies removal
• banking regulations
A single government decision can move share prices sharply.
5. Industry Performance
Sometimes it’s not the company…
It’s the entire sector.
For example:
• if oil prices crash → oil companies fall
• if banking rules change → bank stocks move
So even a good company can fall because its industry is struggling.
6. Company News (Beyond Profit)
Things like:
• new CEO appointment
• scandals or fraud
• expansion into new markets
• mergers and acquisitions
All these affect investor confidence.
7. Dividends
If a company:
• increases dividend → price may rise
• cuts dividend → price may fall
Because investors love consistent income.
8. Global Events
Even if a company is in Nigeria…
Global issues can affect it:
• war
• oil price changes
• foreign exchange rates
• global recession
Everything is connected.
9. Market Sentiment (Human Emotions)
This one is powerful and dangerous.
Sometimes prices move because of:
• fear
• greed
• rumors
• hype
Not logic.
That’s why markets sometimes:
• rise too fast
• fall too hard
10. Liquidity (How Easy It Is to Buy/Sell)
If a stock is:
• actively traded → price moves smoothly
• rarely traded → price can jump suddenly
Let Me Be Honest With You
Even experts cannot predict price movements perfectly.
Because:
The market is a mix of logic and human emotion.
Final Truth
Profit and loss tell you about the present.
But share price reflects:
👉 what people BELIEVE about the future.
Let Me Leave You With This
Many beginners ask:
“Why did the price fall? The company made profit.”
But the real question is:
“What did investors EXPECT… and what actually happened?”
Because once you understand that…
You stop being confused.
And you start thinking like a real investor.
I am Rose Ejituru
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