February 28, 2009
How does stock trading work?
farinheit asked:
I think I understand it: Stock is decided by the worth of the company divided by the number of shares to produce the worth of each stock? What decides on how much shares a company gives away? What makes the price of the stocks go up? Ex: If I get half of the nation to buy stocks in company X, would the price of each stock go up? Or would it go up if I get half of the nation to buy FROM the company?
Reid
I think I understand it: Stock is decided by the worth of the company divided by the number of shares to produce the worth of each stock? What decides on how much shares a company gives away? What makes the price of the stocks go up? Ex: If I get half of the nation to buy stocks in company X, would the price of each stock go up? Or would it go up if I get half of the nation to buy FROM the company?
Reid
Comments on How does stock trading work?
Elaine
The amount of stock sold by a company varies– they can also sell more and buy back stock at pretty much any time if they want to. Stock is sold by a company to raise more money. Once a share of stock is out on the market, the company does not get any more money from its sales, it’s a one time deal. A company cannot just randomly sell an extra 100 shares of stock. It must be approved by their stockholders. A share of stock is a percentage of ownership in a company, so every time more stock is issued, the amount of the company that a single shareholder owns goes down- and thus the price of the stock generally goes down.
Once out on the market, stock prices vary constantly. It depends on the popularity of the stock, how many are on the market to be sold, and what people are willing to pay. The more people want to buy a certain stock, the higher the price will be.
A stock’s intrinsic value (what its really worth, not what the market price is) is based upon many factors, including the value of the company, the key executives, and industry comparatives. This is an estimated value, and you could have 10 different people turn out 10 different values.