What determines the price of a share of stock?

What determines the price of a share of stock?

The price of a stock is really determined from the classic economic philosophy of supply and demand. Stocks are traded freely in the marketplace, it's one of the few true freely traded securities out there. And so, the price is going to represent the value that everybody as a whole feels that stock is worth. So, with a stock in the stock market, if somebody looks at this company and it's selling for twenty dollars a share, they may say "Wow, you know, the company's worth more than that." And so they're going to buy the shares of that stock until the price gets to a place in which that buyer no longer feels that it's a great deal. And then there's always a seller on the other side of that transaction. And they're really thinking for that twenty dollars, that's a terrible price, so they're wanting to sell stock. And so what happens is, the price comes to this equilibrium, where all the buyers think it's a fair price, and all the sellers think it's a fair price, and that's what establishes the price of a stock.