Well, this seems to be a very basic question. Nevertheless :
- A share is an asset, in a sense part ownership and hence a claim on the future revenue streams (profits) of a company
- Basic economics states that price of an asset is dependent on demand. Higher the demand, higher the price and vice versa.
- Fundamentally, if a company is performing well - increasing profits (EPS) rapidly the demand will be higher (as the claim is on a higher profit base) and hence a higher price. Losses means the demand will be lower and hence a lower price.
