I think that a stock price represents the company's value and the
accumulation of discounted future growth. Currently dividends seem not as
important as previous that many companies do not pay dividends at all but still
attract lots of investors to buy their shares, such as Apple (though it has
started to pay dividends). Shareholders are the owners of their companies, the
reason for shares having values is because shareholders expect they will get
dividends from their companies or sell their shares at higher prices. Let's
ignore the option of getting dividends, as many companies' dividend yields are
only a bit better than bank saving rates, and investors are bearing a lot
higher risk. Then investors' main purpose of buying shares is to sell their
shares at higher prices. However, shares need actual functions to gain values.
Shareholders can use their shares to influence the companies. However, small
investors cannot have sufficient shares to make actual influence on the
companies; in these ways, shares owned by them do not have functions. Of
course, they can sell their shares to large investors and large investors buy
shares from small investors and gain influence over the companies. However,
there is a situation when large investors do not need small investors' shares.
Such situation takes place when the company has only one large investor and the
large investor has already gained sufficient shares to control the companies, then small investors' shares become useless so their shares would
be valueless and the large investor have a plenty of ways to get profits from
the company anyway. Therefore, the share price will be low and almost valueless
under such circumstance.
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