I’ve been trying to understand how share prices work in the stock market, but I’m confused.
Sometimes I see:
One company trading at ₦10,000 per share
Another company trading at ₦50 or ₦500
And naturally, it feels like the ₦10,000 share should be the “bigger” or more valuable company.
But I’ve heard people say that:
Share price does NOT determine the real value of a company
And that something like “number of shares” and “company valuation” matters more
I also came across questions like:
If one company increases its share price, will another company also increase?
Do all stocks move the same way?
How exactly do companies adjust their share price?
Someone mentioned things like:
Share split
Reverse split
Market demand and supply
But I don’t really understand how all these work together.
Please explain in a simple way:
Why share prices are different between companies
Whether a higher share price means a better or bigger company
How share splits actually work
And how smart investors should think when looking at stock prices
I don’t want big grammar – just a clear explanation that even a beginner can understand.
You’re asking the right question—this confusion trips up many beginners. Let’s break it down in plain terms. 🔹 1. Why share prices are different A share price is simply the price of one unit of a company. But companies don’t all have the same number of shares. 👉 Think of it like this: Company A hasRead more
You’re asking the right question—this confusion trips up many beginners. Let’s break it down in plain terms.
See less🔹 1. Why share prices are different
A share price is simply the price of one unit of a company.
But companies don’t all have the same number of shares.
👉 Think of it like this:
Company A has 1,000 shares at ₦10,000 each
Company B has 1,000,000 shares at ₦50 each
Which one is bigger?
We calculate market value (market capitalization):
�
Company A → ₦10,000 × 1,000 = ₦10,000,000
Company B → ₦50 × 1,000,000 = ₦50,000,000
👉 Even though Company B’s share is cheaper, it’s actually bigger.
🔹 2. Does a higher share price mean a better company?
❌ No.
A high share price can happen because:
The company has fewer shares
It has grown over time
It has not split its shares
A low share price can mean:
The company has many shares
Or it’s just structured differently
👉 What really matters:
Profit (earnings)
Growth
Assets
Business strength
Not just price.
🔹 3. Why prices move (₦50 today, ₦70 tomorrow)
Prices change because of demand and supply:
More buyers → price goes up 📈
More sellers → price goes down 📉
Things that affect this:
Company performance
News
Economy
Investor sentiment
👉 Important:
Stocks do NOT move together.
If one company rises, another can fall. Each company is different.
🔹 4. What is a share split?
A share split is when a company increases the number of shares and reduces the price.
Example:
Before split:
1 share = ₦1,000
After 1-for-10 split:
10 shares = ₦100 each
👉 Your total money stays the same.
₦1,000 = ₦100 × 10
Nothing is gained or lost—it just makes shares look “cheaper” and easier to buy.
🔹 5. What is a reverse split?
The opposite:
Before: 10 shares at ₦100
After: 1 share at ₦1,000
👉 Still the same total value.
Companies do this to:
Make price look stronger
Meet stock exchange requirements
🔹 6. Do companies “control” their share price?
Not directly.
The market (buyers and sellers) sets the price.
Companies can only influence it through:
Good performance
Dividends
Announcements
Actions like splits
🔹 7. How smart investors think
Instead of asking: ❌ “This share is ₦10,000, is it better?”
Ask: ✔ How much is the company worth?
✔ Is it making profit?
✔ Is it growing?
✔ Is it undervalued or overvalued?
👉 Example mindset:
₦50 stock can grow to ₦150 (3x gain)
₦10,000 stock might stay at ₦10,500 (small gain)
So cheaper doesn’t mean worse—and expensive doesn’t mean better.
🔑 Final takeaway
Share price alone = not important
Total company value (market cap) = more important
Growth and fundamentals = most important
Alright… relax first. Because this is where many people get confused and miss opportunity. You see: ₦10,000 per share ₦1,000 per share And the first thing that comes to your mind is: “This one of ₦10,000 must be bigger.” No. That is where the mistake starts. FIRST - LET ME CORRECT ONE THING Share prRead more
Alright… relax first.
Because this is where many people get confused and miss opportunity.
You see: ₦10,000 per share
₦1,000 per share
And the first thing that comes to your mind is:
“This one of ₦10,000 must be bigger.”
No.
That is where the mistake starts.
FIRST – LET ME CORRECT ONE THING
Share price is NOT value.
Let me say it again…
Price is what you see
Value is what actually exists
Let me explain this better with a Simple Story…
Imagine:
Mama Ngozi has a tomato business worth ₦1,000,000
Now she wants people to invest in her business.
She has two options:
OPTION 1
She divides the business into:
100 parts
Each part = ₦10,000
OPTION 2
She divides the business into:
1,000 parts
Each part = ₦1,000
Now answer me…
Is one business bigger than the other?
No.
Same business
Same value
Different structure
THIS IS THE SECRET
Share Price = Total Company Value ÷ Number of Shares
That’s all.
Nothing more. Nothing less.
NOW LET ME ANSWER YOUR QUESTION…
You asked:
“If one company adjusts price… will the other adjust?”
No.
Because each company controls its own structure.
And they don’t randomly “add ₦100” like you think.
There is a proper system.
And This Is Where “SHARE SPLIT” comes in
Oya… calm down.
Let me break it down simply.
In Financial Accounting…. There’s What we called “FORWARD SHARE SPLIT” and “REVERSE SHARE SPLIT”
Chieeee…..
Iking ooooooh?
Wetin Bring Accounting Again for this Small Question Na?
Oya… Relax…
Let me Explain this in a way that even Grandma in the Village will nod her head and say: “Yes my Pikin, I understand this one”
1. FORWARD SHARE SPLIT
(Simply means Making the price of a STOCK cheaper)
This is when a company says:
“Let’s make our shares more affordable”
For Example:
₦1,000 per share = becomes ₦500
What happens?
Numbers of Outstanding Shares DOUBLE
And the Price reduces
But the…..
Value remains the same
While….
2. REVERSE SHARE SPLIT
(Simply means Making the Share price higher)
This is when a company says:
“Let’s increase the price per share”
For Example:
₦1,000 per share before = becomes ₦2,000 now.
What happens?
The Numbers of outstanding Shares reduce
While the Price per Share increases
But… The…
Value remains the same
Now….
Listen carefully…
Share split does NOT make you richer.
YES…
If you had ₦100,000 before…
You still have ₦100,000 after.
Just arranged differently.
But….IKING OOH!
WHY DO COMPANIES DO THIS?
Now this is the part most people don’t understand…
Let me tell you the hidden game in finance
First….
IS TO ATTRACT MORE INVESTORS
Because….
Many people think:
₦50 = cheap
₦5,000 = expensive
Even when they don’t understand the company.
So companies reduce price to attract more buyers.
Second….
IS TO INCREASE LIQUIDITY
Because….
More shares = more people can trade
And when trading increases…
Market becomes active
And Price movement improves
Third…..
IS TO CONTROL PERCEPTION
Yes… This one self Na hidden Secret oooh.
Because…
Some companies want to look:
Affordable to (retail investors)
And Premium to (big investors)
So they adjust structure accordingly.
As your Financial Literacy Advocate….
Let me tell you The Biggest Mistake People Make…
You go to NGX…
You see:
₦10,000 share = “Too expensive”
₦50 share = “Cheap, let me buy”
That is how people lose money.
Because…
Cheap price does not mean cheap value.
So…
Before you ask:
“How much is this share?”
Ask:
“What is this company worth?”
Because…
Smart investors buy VALUE.
While….
Average investors chase PRICE.
If you truly understand what I just explained…
You will never look at stocks the same way again.
Because…..
Most people miss opportunity not because they don’t have money…
But because they don’t understand what they are looking at.
My name is Iking Ferry, a Financial Literacy Advocate and Investment Strategist On a mission to build 10 million financially free Nigerians and Africans Through the right knowledge.
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