Why most of the companies provide shares with high price?if its low then even an average person can buy sahres

Question

I the company divides its investment in the small equities, and average or middleclass people can invest the money by buying the shares and this low cost shares will give more chance to get the investment money for the company?

Answer 1

The price of a share of stock is largely determined by the economic law of supply and demand. If lots of people want the stock, the stock price will be high. Typically, this is also because a company has significant earnings and profits. If very few people want the stock, the stock price is likely to be lower. This is typically because a company has not had significant, or perhaps any, earnings.

Companies actually have very little control of the share price of their stock. The only time companies can really affect their own stock price directly is when the company has either an IPO, a follow-on, or a second company publicizes that it wants to buy the first company out at a price which is (usually) a premium to its share price at that time. Actually, there is one other way this can happen: if the company elects to have a stock-split. Usually, when a stock-split occurs, management of the company believes that the stock is priced at a rate higher than some of its competitors, and therefore makes it a less attractive investment to many investors. The belief is that the lower price will attract more investors, thus causing the stock price to continue to go higher. Sometimes it works that way, and sometimes it doesn't. Its always a bit of a risky move for companies to try to take that route for those reasons.

Answer 2

Unless the stock that you’re purchasing is an IPO (initial public offering) then the business of the stock which you are purchasing may not see the money from the sale or purchase of stock. When a business issues a stock, they receive the money from that sale. After that, stocks change hands based on who owns them and who wants them. The business has nothing to do with these sales. The individual investors are the ones making/loosing the money. The price of the stock (after the IPO) is based on the supply and demand of these stocks. The price of the stock will increase as more and more people want to purchase that stock (the demand increases). If a business were to issue more stock (increase the supply) then the price of the stocks already on the market for that business could potentially decrease.

Thank about it this way, if a business could sell a widget for $100 and make the profit they want while selling the amount that want or can produce…that business would not benefit from decreasing the price to $80. By decreasing the price, they would allow more people to be able to afford the product but unless they can sell and/or produce more in order to make up the $20 difference between the new and old price then they have lost money.

Answer 3

It is cheaper and simpler for a company to have a few big investors rather than a lot of little ones. Think of maintaining the register, paying out thousands of little dividends or sending out the annual reports, organising annual meetings and dealing with enquires and complaints from a lot of ignorant people.

Answer 4

Some companies want their shares to be purchased by wealther clients. They feel their will be less turnover of their stock that way.