So, I own a business that owns several other businesses and rental properties. Our corporation is owned by 100 people. Each person owns a share of the umbrella business. Sometimes people buy and sell their shares to other people. Buyers and sellers of shares assess the financials of our corporation, they do their due diligence, estimate future income and growth, and agree upon a price to exchange their shares. As inflation has driven up the cost of EVERYTHING, we have also increased wages of our employees and we've increased prices on our goods, services, and even leases and rent. As a result, we observe that when share holders sell shares of our corporation, they demand similarly higher and higher prices. For example, our property holdings valuations increased 100%. So recent trades saw the price of our shares increase by nearly 50%. And as long as the company continues to make steady sales and steadily renting properties, there is no share holder that would desperately sell their share(s) for LESS than they paid. What once cost $1,000,000 per share now easily commands $2,000,000 per share, and I foresee that they'll never fall below that. Dollars simply are not worth what they used to be worth.
Anyhow, I see lots of talk about publicly traded corporations, with millions even billions of outstanding shares. And often I see people say that inflation drives DOWN the valuation of shares of a company. I don't get that. If the company is fairing well, if they maintain their profit margins, even if they do have to pay their employees more, when their products are in demand and sales remain steady, they simply raise prices maintain profit margins.
Why do people think that share holders should sell their shares for LESS than they paid? What is driving down the valuation of shares of large publicly traded companies during periods of high inflation?
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