What determines a company's stock price?

The post What Determines a Company’s Stock Price? appeared first on SmartAsset Blog. Stock prices are set by what's known as the secondary market, which is the technical term for investors trading shares among themselves. This is opposed to the primary market, when a company sells shares of stock directly to investors.

What determines the price of a stock if it goes public?

Once a company goes public and its shares start trading on a stock exchange, its share price is determined by supply and demand in the market. If there is a high demand for its shares, the price will increase. If the company's future growth potential looks dubious, sellers of the stock can drive down its price.

What makes the stock market similar to other economic markets?

This makes the stock market similar to other economic markets. When a stock share is sold, a buyer and seller exchange money for share ownership. The price for which the stock is purchased becomes the new market price. When another share is sold, this price becomes the newest market price.