I guess I understand supply and demand – I have something I judge more valuable, I’ll ask for a higher price to sell it for.
​
I wonder how company stock is valued – Is it enough to have one single person ask for a certain price for a stock to change its value?
I guess I’d like to understand it in terms of a company that only has 10 shares. If I’m the owner of one, how impactful am I in changing its price?
In: Economics
The “price” of a stock is how much the stock was sold for the last time it was traded. So, if someone recently sold a piece of the stock to someone else for $100, the stock price is $100. If you own the stock and say “I will sell this stock for $200”, it probably won’t change the price, because nobody is going to want to buy it for that much.
There are usually lots of people who have placed orders at certain price thresholds. Maybe for that $100 stock, there are people who’ve placed orders saying “I want to buy the stock, but I won’t pay more than $99 for it” and other people saying “I want to sell the stock, but I won’t sell it for less than $101”. So now, if you jump in and say “I’ll sell the stock, at whatever is the best price I can get”, then it would get sold to one of the people offering to buy it at $99. Thus, the price would now be $99.
Latest Answers