Eli5: How is the exact price of a stock calculated?

Question

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

In: 11

Answer 1

Generally you don’t buy/sell stock from people. You buy/sell stock from organisations known as “market makers”. Market makers set the price they’re willing to buy and sell stock at.

The “buy” price you see is the lowest price that a market maker will sell that much stock to you for. The “sell” price is the highest price that a market maker will buy that much stock from you for.

If people are trying to sell stock to the makers, the makers drops the prices. If people are buying stock from the makers, they increase the price.