I get what causes a stock’s value to rise and fall in general but I don’t get where the exact numerical price of the stock comes from
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Others have explained how the price is made by buyer / sellers.
One other important notion is a company valuation : many analysts will look at a company, its growth plans, its markets etc and model the performance they expect.
There’s a bit of math involved, but for the sake of simplicity, say that analyst A expect the company to earn $10M/ y for the next 10 years.
So for that Analyst, the company is “worth” $100M. If he also knows that the company has $30M debt, so that $ 70M of value left for shareholders.
If there’s 1 M shares, then the fair value is the stock is 70$ and analyst will buy if the stock is below, sell if the stock is above.
Now this is completely dependent of what analyst A believes and what he modeled.
With the same data , maybe another analyst estimates that the company is worth $120M and the target share price is 90$…
That’s why stocks can change a lot when new information is published, people revise their assumptions of what “fair value” is.
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