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.

>>Tracke+v61
> 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.

How does this work if a company doesn't pay out dividends? There's no investment to return unless someone buys from you at the same or higher price... right?

>>dijit+q91
There are multiple ways to do this analysis, and not all of them come from evaluating them as investments. Stocks represent an ownership stake in the firm, and you can use any method you want to give a number to what the firm's "value" is. This could be by reading financial statements, comparing it to other existing companies, seeing how much their operating cash flow is and so on.