What factors trigger stock prices to go up?
Posted by admin in Finance Saturday, 7 May 2011 23:24 5 Comments
I was once mentioned that stock prices fluctuate based on how well the company performs. Is that so??
What determines stock prices to up or down? Thanks.
Supply and demand determines stock prices. Also, economic news, the industry the company is in, and company profits.
If a company meets its expectations, more investors will want to hold shares of the company.
I’m not trying to dismiss your question but the answer is everything. I can’t think of anything that doesn’t affect stock prices. Hurricanes affect oil and gas stocks, Obama signing an arms agreement with Russia affects every company that invests in Russia. Some guy sitting in an office who says that he thinks a company isn’t that good can make the stock drop in value. You could name anything and I’m pretty sure I can tell you how it can affect the price of a stock.
In the long term its based on performance, fundamentals and earnings, In the short term its based on news, and events concerning the company.
Simple answer to your question would be “Buying and Selling” of Shares/Options.
When you place an order to buy 100 Shares of company at say $20 then your broker looks for a Seller who is willing to Sell at the price you requested. If there is no Seller at the price then your option is to either go higher say $21 or don’t buy and wait for some seller to come by at your preferred price. If you then decide to go higher and buy at $21, you have caused the price of the share to go up by $1. Thousands of people do the same thing at the same time which causes prices to move.
The reasons why people would buy or sell could be numerous. Yearly earning reports, Executive decisions, Hedge fund investments, Wife not happy…could be anything.
Hope this helps.
Stock prices go up when:
1) There is more demand for the stock and not enough supply
2) Good news about the company is reported (Increasing the value in investors eyes)
3) Earnings for the company are higher than normal
4) The company is in a high growth industry.
5) Warren Buffet just bought it