Stock Price

How to read it

This is the price of one share on each trading day. It moves with supply and demand for the shares: company news, earnings reports, changes in interest rates and shifts in what investors expect all push it up or down. On its own the price says little about whether a company is cheap or expensive, because it depends on how many shares exist.

What is typical

Companies choose their share counts, and some split their shares to keep the price low, so prices differ widely even between companies of similar size. Volatility differs too: established companies in steady industries tend to move less from day to day than young, cyclical or heavily indebted ones. Look at the valuation ratios built on the price and compare them with the sector medians rather than comparing prices.

Pitfalls

A stock split or reverse split changes the price without changing the value of the business. On stockrow the stock price feeds many valuation ratios that are worked out daily — price to book, price to sales, price to earnings, earnings yield, free cash flow yield and the enterprise value ratios among them — so a sharp move in the price moves all of them at once, while their other inputs change only when the company reports.