A stock price is determined by an agreement between a seller and a buyer and reflects all the relevant information known at the time, so factors affecting the stock price are the factors that investors--buyers and sellers--take into account when making buy and sell decisions, as well as the opinions they form while analysing those factors.
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Sales and Earnings Growth
The higher a company's sales and earnings growth, the bigger it can get, and the higher its stock price can go.
A share of a company stock is an asset whose price tag may vary. The less an investor pays for a stock, the more of a bargain he can get. Investors use numerous valuation methods and models to determine the fair price of a company's stock.
Outlook and Opinions
Because stock prices reflect all known facts, the stock market always looks to the future in an effort to assess and price in a company's prospects. The opinions expressed by analysts, financial commentators, money managers and other market participants differ, which in turn affects stock prices.
An unanticipated report or development not priced into a stock, such as an earnings surprise, a CEO resignation or a federal drug approval, may cause an instant and drastic adjustment to the stock price, often in the form of a gap.
Investor sentiment about a stock can vary from downbeat to euphoric. When investors are optimistic, they are willing to pay more for a stock, and when pessimistic, they pay less. The price of a stock can vary based on these changes in sentiment even with no underlying changes in a company's financial condition.
Supply and Demand
If a large shareholder decides to sell his position, his selling will push down the stock price, even if only temporarily. Changes in the available supply of and demand for stock can greatly affect stock prices regardless of opinions or valuations.
Stock Price Changes
As they say in stock trading, price is the best advertisement, meaning that price changes themselves affect investor buy and sell decisions, causing further price changes. This is the basis for momentum investing and trend following: Investors attracted by a rising stock price intensify their buying, pushing the stock price higher, turning the price change into a self-fulfilling prophesy.
Stock trading is a for-profit business, and some market operators will deploy all means at their disposal--legal or not--to manipulate prices in their favour. For example, a buyer may push a stock price lower to get a better deal.
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