What causes stock prices to rise and fall?

Question

Specifically, what kind of examples would cause a company's stock price to go up?

Answer 1

Reasons could be good news like new product, good earnings and all that. It could go down due to bad reasons like lawsuits, bad earnings, earthquake destroys their factories etc.

And supply demand is sell vs buys. If theres more demand prices will be pushed up. As far as formula goes, I dont think theres a formula. because some news is cannot be quantified. For example, if theres a rumour of something negative, prices might go down. But you cannot quantify rumours and peoples' sentiments to use in a formula.

Answer 2

Up: Their products sell well, such as KFC selling more food

The Company gets acquired by a new parent company, like youtube being bought by google

Down: They go bankrupt

Someone makes a bad business decision

They get sold for a bad price

Answer 3

There several factors.  One is general market sentiment.  But, come rain and shine, one stock will perform in line with its growth rate of earnings.  As an afterthought, a revolutionary product coming to market.  An example was the development of a safe "pill" for contraception in the early 60s which coincided with the draft scare and the increase in the need for sexual activity.

Answer 4

To understand this, you need to think of stocks as commodities, as products that are being traded in a market. If it helps you comprehend, think of how stocks were traded a hundred years ago--people would physically go to the trading floor and swap pieces of paper (stock certificates) that represented the stock they were trading.

When a company has its initial public offering, the first few stocks that are purchased are bought directly from the company, and they use the profit to fund research or development or expansion or whatever they want to use it for. But once the stock is issued, its existence becomes somewhat independent of the company. It's now a commodity, a product, that someone owns, and the company won't make money off any further trades involving a particular stock.

So, suppose you bought a stock in Coolcat Company. This stock represents your ownership in the company. You might get to vote on the election of members to the board of directors, and the company may pay you a dividend of their profits according to the number of stocks you own. If this company is doing very well, other people will be interested in owning part of it, so they'll be willing to pay more for the stock. If the company's doing poorly, nobody will want to touch their stock because nobody wants to be partial owner of a company that's not making any money.

So at the most basic level, the law of supply and demand dictates the price of Coolcat Company's stock. If the company is doing phenomenally, lots of people will want a piece of it, so because of the limited number of stocks they'll be willing to dish out some money.

So, one important point to get from this is that a company doesn't have control over their stock price. Nobody really "calculates" it according to a formula. On the physical floor of the New York Stock Exchange, for example, your brokerage firm would sell your stock to the buyer on the floor who's willing to pay the most. It's up to the buyer how much he's willing to pay.

The official "price of a stock" is simply the last value at which that stock was traded in the exchange.

Now, these trades occur all the time, constantly. They're going on right now. Because they occur so often and involve different buyers and sellers each time each with different ideas about how much a stock is worth, stock prices are very volatile and jumpy. But if everyone generally agrees about the value of a company, the stock will tend to increase in the limit, even if it might jump around a bit on the way up.

I hope this clears up the matter a bit for you. :D

Answer 5

As for stocks going down; every person whose answered thus far is a reason stocks go down like they have recently.  Stocks rise and fall because people who have NO idea how investing works, invest in the market.  Usually with such extreme fluctuations it's someone too timid about their investment to ride out a shift and they knee-jerk sell when they should be buying.

However, I think you just want the specifics so here we go.  Stocks go up as trading (interest) increases.  The more a stock is sold the more it becomes worth.  Thus the inverse is true.  When someone panics and sells mass amounts of stocks they begin to trend downward and when that happens other small investors freak and start selling.  This leads to big losses in the market; sort of like what happened today.  These losses are not representative of the company's value but instead show the ineptness of most traders.

Answer 6

It basically comes down to supply and demand. Solid companies with great fundamentals and earnings can go down in price if there is no interest in the company. And companies with no earnings or staff can reach $200.(dot com boom). Stocks usually appreciate if the company beats earnings estimates,releases good news,has a buyout offer or simply on positive rumour's.

Answer 7

To quote one of the greatest American poets,Ezra Pound:"With USURER,wool cometh not to market".

Answer 8

Bad earnings results or  the consumer  confidence index falls or a major stock brokerage give it a "buy" recommendation..

Answer 9

to make it simple, they rise and fall based on their popularity. how many people or entity's are investing in them and how much are they investing. When alot of people buy, it goes up, when people sell the stock it goes down. Generally financials reports news reports etc drive that

Answer 10

Not in order of importance

1. News (about the company, industry, sector, or anything investors find relevant)

2. Company's Financials (earnings, revenue, debt, etc.)

3. Investor sentiment (just what investors think about the company)

I think you're a bit confused on how the stock market works (I would go to investopedia.com). The stock price isn't calculated by anyone that uses a special formula- what happens is that there are auctions for a share (of the company). If a lot of people really want to own a part of the company, they will pay more to the seller.  The stock price will increase since people are paying a higher amount for each available portion of the company. If the seller isn't able to find investors willing to pay as much as they used to (before demand lowered), the person selling might want to sell so badly that s/he is willing to sell the shares cheaply.

Answer 11

It is supply and demand.  That means if 1 million people want to buy the stock at $50 and only $700,000 want to sell it at $50 the stock is going to go up, to make it more attractive to sellers.  

This continues until their are more sellers the stock then buyers. Then it goes down to make it more attractive to buyers.  Remember the markets always want to have 1 buyer for 1 seller.  If their is not enough sellers at $3.7 it will continue to go up until it has enough sellers to meet the needs of the buyers.

The market makers are the ones in charge of 'keeping the balance' if you will