I want to know the factors involved in changing stock price of a company. When a company doing good, the stock price increases, but how does that happen?|||Amazon posted a huge gain one quarter and their stocks took a dive.
Mutual funds, hedge funds and inside holders (like the CEO and the board) hold the majority of any stock. Mutual and hedge funds have their own formulas on what they expect from a company. That projection is built into the price (aka they buy or sell till the majority feel that it's the price it should be). Those projections are also called estimates, so when the news talks about beating, matching or falling short of estimates, you know what the news means.
Volume is the other factor. On low volume days or low volume stocks, there are fewer people deciding if a stock goes up or down. You shouldn't be concerned with a stock that goes up on high volume and down on low volumes. That means that vast majority of holders think the stock is going up. If the volume is high and the stocks are going down, chances the majority of holders are bailing or cashing in.|||There are two broadly defined approaches that individuals use to assess the day-to-day price changes of a stock.
Technical analysis looks at past trends in the stock price itself and how it is trading. Technical analysis takes into account the stock price movements over time, trading volume, trends compared to other stocks, trends compared to other indices and other measures to predict general movements in the stock.
Fundamental analysis looks at the company's strategy, financials, competitive position, product set, R%26amp;D pipeline, etc. to determine a fair value in the stock. I would suggest Valuation by Koller et al or Security Analysis by Ben Graham as the definitive sources on fundamental analysis.
Minute to minute changes in the stock price are a function of supply and demand and the choices of millions of people buying and selling for a million different reasons.
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