How are prices of stocks determined on a daily basis?

Question

Why is Google’s stock priced at 129$ and Microsoft at 322$ for example?

In: 6

Answer 1

To have a market you need a lot of people. Then you have some that have the stock and want to sell it. They put a sell order at whatever price they are willing to sell. Then you have people that put orders are what they are willing to buy. The stock market then matches them and if there is a match then there is a sale and that’s the price. Every transaction sets a new price. The more transactions you have the smaller the spread. If you look at stocks that are very thinly traded then you will see that there are lots of pending orders that don’t match waiting for a market price order (those are the ones that say sell/buy at whatever price is available)