Why do stock prices change?

Stocks
21

Stock price changes based on the demand or supply of stocks. The demand or supply of the stock will change based on several factors such as economic situation and outlook, sectors, the fundamentals of the company and many other things.

22

Already very late and many have replied variously. But still I will try to explain.

  1. You got very basic thing wrong here. There is no inherent value in owning tomatoes. My brother do not like taste or even smell of tomatoes( I dont know why!) So if tomato has a intrinsic value ie happiness of eating, then my brother must enjoy it as well. No question of personal like or dislike. But as you can see there is no intrinsic value.

Also its not always one can trade tomatoes to make profit. Many times farmers just unload their trucks of tomatoes on road to rot because price they are getting is not enough to even pay for truck tariff.

So only in certain circumstances, tomatoes can be useful.

Also what you are calling as trade value do not depend on inherent value. Many a times very valuable things like ancient artefacts , cultural icons etc are neglected and sold for pennies.

  1. To answer your final question, yes people own stock because they expect the value of that stock to go up. That’s it. Whether they sell or not is another question. Many a time investor gets emotionally attached to the stock and gets exited only after stock is delisted and his holdings become worthless.
    But yes 99.999% of the time, people buy stocks for no other reason - Only reason - you must earn from the stock - by dividend, splits, bonus, prices going up .
23

Stock prices can change mainly because of two factors.

  1. Demand of the stocks, more than what is already present in the market, will result in an increase of the stock price. Conversely, if more people sell the stocks, there is more supply in the market and less demand, which devalues the price of the stocks.
  2. Company performance - If any negative news of the company is portrayed in front of the public, such as fraud or scam, then the company will go down immediately. But if any positive news is portrayed, such as the company’s tie-up with bigger names, then more people will be interested to buy the stocks of the company.