If people started selling off their shares, the share price would drop, so maybe in the end this hypothetical company would end up worth $500k. I’m not the original commenter, but I assume that was their point.
This is only true if there is a lot of dispute about the value of the company.
Suppose a company is nothing more than the owner of a bank account with a million dollars in cash. Well, then it's worth a million dollars. If there are a thousand shares then you'll be able to find arbitrarily many buyers at ~$1000/share. Existing investors would have no reason to sell for less than that because they could get that much just by liquidating the company.
Where the values diverge significantly is where there is a lot of uncertainty about the value of the company, and then there could be a lot of variation in how different people value it, so that the existing owners might assign a much higher value than others, and if they tried to sell a significant fraction of the shares it's the others whose price they'd have to meet to find a buyer.
Public company acquisition prices are highly correlated with their market caps. In fact, in acquisitions, the acquirer generally pays a premium to the market cap [1].
[1] https://cpb-us-west-2-juc1ugur1qwqqqo4.stackpathdns.com/u.os...
