zlacker

>>qqqqqu+(OP)
If I buy a stock, does the price at which I agreed to buy it become the new share price on the stock exchange?

Every article on "Where do stock prices come from?" seems to just talk at a high level about supply and demand.

But where does the price come from at a nitty-gritty level? Is it an average of all existing offers or something?

Do different exchanges and stock-ticker websites have different formula for calculating share price?

If a very low-volume stock is listed at $4, and then I offer to buy a share for $100, does the NYSE suddenly start listing its price at $100?

>>robert+XO
I think the other answers have been good at explaining HOW stock prices are determined at the exchange, but if you're wondering WHY someone would say "That stock is worth $xx.xx", then that's a more complicated question, with equally complicate answers.

At the very lowest level, it could be gut feelings from a potential buyer. They see electric cars more frequently, combustion engines going out of fashion, and simply wonder "Hey, why does that [electric car company] trade so low, when they'll probably be market leaders in 5/10/15 years?", or conversely, "Hey, why does that [petroleum] company trade so high, oil prices are shot, and the industry will lose relevance in 10/20/30 years"

On a higher level, some potential buyer will look at the companies financial statements, and figure out if the share price is too high / low for how the company is performing, from a financial standpoint. This is called "fundamental analysis", and you can easily find step-by-step analysis reports of such on various companies.

But the market is one big hodgepodge of beliefs, with probably thousands of different rationales behind their prices, and motives for sales / purchases.