What determines share prices

The market value of a company (also known as its ‘market capitalization’)
is calculated by multiplying together two figures:
T The number of shares in issue
T The market price per share
The number of shares in issue is up to the company. What is far
more important is the amount of money it wants to raise. For example,
suppose the Gassy Beer Company wants to raise $10 million.
There are many ways in which this can be done:
T It could issue 10 million shares at $1 each
T It could issue 5 million shares at $2 each
T It could issue 2 million shares at $5 each
and so the options continue.
It is entirely up to the company which option it selects. There is
an argument, though, that the higher the price of a share the less tradable
it becomes. For example, if the Gassy Beer Company decides to
issue just two shares at $5 million each, there probably would not be
very many potential buyers! As a result, most companies like to keep
their share prices reasonably low in order to encourage trading.
Of course, once the shares have been issued, the market value of
the company will be dependent on the price that investors are subsequently
willing to pay for those shares, which will be driven by expectations
of future profits. If information comes to light that suggests the
company will make higher profits in the future than previously
expected, the value of goodwill will increase and this will be reflected
in an increased share price. Conversely, if information becomes available
that suggests that profits in the future will be lower than previously
expected, the value of goodwill will decrease, and this will be
reflected in a reduced share price