📈 Stocks & Equities · Lesson 2 of 9 · 10 min
Why Do Stock Prices Move?
🚀 GameStop rocketed from $4 to $483 in a matter of months while the company itself did absolutely nothing impressive. If prices aren't about how 'good' a company is, what ARE they about? You're not going to love the answer.
💡 Key idea
Price = what someone will pay RIGHT NOW. Not what the company is worth.
🧠 Why it matters
Stock prices move because of supply and demand. More buyers than sellers = price up. Driven by news, earnings, emotions, and hype.
🌍 In the real world
😤 In February 2021 Elon Musk tweeted 'Dogecoin is the people's crypto' — the price jumped 50% in hours. No new product. Just a tweet.
📌 Takeaways
- Supply & demand drives every move
- News and emotions move markets
- Smart investors separate price from value
📖 Terms in this lesson
Market cap: What the whole company is worth on the market: share price times number of shares.
Volatility: How much and how fast a price swings; the price of higher returns.
✅ Test yourself
What drives stock prices UP?
- CEO salary
- More buyers than sellers
- Company age
- Government
Answer: B · More buyers than sellers
Supply and demand. When more people want to buy than sell, the price rises.
Why did GameStop spike from $4 to $483?
- Huge profits
- A buying frenzy — demand exploded
- New product launch
- Government bailout
Answer: B · A buying frenzy — demand exploded
A wave of buyers (many from Reddit) flooded in. Demand massively outpaced sellers — pure supply and demand, not business performance.
What is the 'price' of a stock, really?
- What the company is worth
- What someone will pay for it right now
- Set by the government
- The CEO's decision
Answer: B · What someone will pay for it right now
Price = what a buyer and seller agree on this second. It can drift far from what the company is actually worth — that gap is where opportunity lives.
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