Common stocks are securities that represent an equity share of a corporation. Common stock shares entitle the holder to a share of the companies profits and success either through stock dividends or through an increase in the value of the stock.
Corporate profits or losses have a strong influence on the value of a company's common stock. If a company is profitable, the stock price often remains stable or increases. If a company posts a loss, the stock prices often fall.
The share of a particular market often affects the value of common stock. For example, if a company increases its share of the available market, thereby increasing its potential customer base, its stock price probably will rise. If it loses substantial market share to a competitor, the price may fall.
A company that frequently introduces new products may experience an increase in the value of its common stock. This often results from increased consumer interest in the company.
Financial analysts set certain expectations for larger corporations. These expectations are built in to the price of common stock shares. If a company exceeds analyst expectations, the value of the shares often rises. If the company fails to meet expectations, share prices often fall.
- How the Market Works: What Affects Stock Prices?
- Yahoo Finance. "Berkshire Hathaway Inc. (BRK-A) Historical Prices." Accessed July 26, 2020.
- Yahoo Finance. "Berkshire Hathaway Inc. (BRK-A)." Accessed July 26, 2020.
- Microsoft Investor Relations. "Frequently Asked Questions." Accessed July 26, 2020.
- Yahoo Finance. "Microsoft Corporation (MSFT)." Accessed July 26, 2020.
Although he grew up in Latin America, Mr. Ma is a writer based in Denver. He has been writing since 1987 and has written for NPR, AP, Boeing, Ford New Holland, Microsoft, RAHCO International, Umax Data Systems and other manufacturers in Taiwan. He studied creative writing at Mankato State University in Minnesota. He speaks fluent Mandarin Chinese, English and reads Spanish.