RE: This Week20 Jan 2025 11:32
A share price drops when supply exceeds demand, which means more people are selling than buying. This can be caused by a number of factors, including:
Negative news: Bad earnings reports, economic uncertainty, or corporate governance issues can cause investors to sell.
Company performance: If a company's sales or revenues fall, it may cut or eliminate dividends.
Investor confidence: News about a company or the economy can impact investor confidence, which can lead to selling.
Government actions: Government initiatives or economic management can impact a company's stock price.
Company reputation: Media interest and social media can impact a company's image.
Resource company challenges: The excitement around a discovery can fade when the realities of funding a commercial product become clear.
Explanation
Stock prices are driven by supply and demand, which is the interaction between how willing people are to buy and sell a stock. When demand is high, the price increases because buyers are willing to pay more. When supply is high, the price decreases because sellers are forced to lower prices to attract buyers.
A stock's price reflects what investors think the company is worth. However, a company's value is its market capitalization, which is the stock price multiplied by the number of shares outstanding.