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
*Asking* for a certain price doesn’t change the value. The quoted value of a publicly traded stock is just the price of the last *agreed* transaction (both buyer and seller agreed on the price).
The number of shares isn’t directly relevant. If you can sell at $1000/share then that’s the price of the share, whether there’s 10 or 10 billion shares. However, volume/liquidity (how many shares are available to buy & sell) has a lot to do with how easy it is to actually get an agreement on the price. If millions of shares are changing hands every day, any individual transaction is pretty insignificant. If you’ve only got 10 shares then a sale represents 10% of the company and, unless it’s a *tiny* company, even very small changes in the company valuation could result in huge changes to the share price and with only 10 potential shares floating around there could be large changes in price between subsequent transactions.
Latest Answers