PostHeaderIcon Understanding Stock Price

Stock Market PriceStock price is what most investors look into when deciding whether it is time to buy or sell certain stocks. Stock prices changes from day to day.  This is due to the certain market forces that may determine whether prices of certain stock go up or go down.

Supply And Demand

Supply and demand is one of the major factors that may determine the changes in stock prices. Demand is created when many people seem interested in buying a stock. How many of the stocks are available would constitute its supply. When these two market forces work in certain situations, they can cause prices of stocks to change.

When people increasingly want to buy a certain stock (demand) but there are relatively few people who are willing to sell them (supply), then the stock price may go up. But on the other hand, if there are more people who wish to sell a certain stock than there are those who are willing to buy them, this usually results in a decrease in price.

Company Value

Aside from the supply and demand principle, there are other factors that may also affect price movements of certain stocks. One of them is company value. How investors view a certain company and its value may also drive its stock either up or down. There are some things that some investors easily mistake as indicators of a company’s value such as stock price. The value is actually determined in terms of the company’s market capitalization and not just its current stock price. One way to determine the value of a company is by multiplying its current stock price with the number of outstanding shares.

Company Earnings

Another thing that may affect company value is its periodic earnings. This is essentially the profit that a company makes. Whenever a company makes money, it basically is able to survive and therefore the level of its earnings may determine its value. The higher the company is earning annually, the better its value is perceived and its stock price usually changes for the better.

These are just but a few of the other indicators or stock price changes that investors look into. But it is not just as easy as one might think. There are other certain indicators that may also have its influence on stock price and cause it to move either up or down. It takes a combination of all these factors and their certain nuances that affect price movement of stocks. Ultimately, no one can definitely know for sure why or what causes stock price changes and at what levels. The best investors can do is predict and make their best guess.


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