The stock market is generally driven by supply and demand, just as every other market is. As soon as the stock is acquired, its purchase price becomes the new market price.ses, the greater the demand for a stock, the higher the price is driven, and vice versa. When the supply of a stock is greater, the price is driven higher, and the reverse is also true. Although a stock's initial public offering (IPO) price is equal to its projected future dividend payments in principle, the price of the stock changes depending on supply and demand. Supply and demand, and therefore a company's stock price, are influenced by a number of market variables.

The value of a company’s stock is estimated by analysing its financial performance, growth prospects, and market conditions. One common method is fundamental analysis, which reviews revenue, earnings, cash flow, debt, and profitability. Valuation models like the price-to-earnings ratio compare the stock with peers, while discounted cash flow estimates present value based on expected future cash flows.

Investors also consider qualitative factors such as management quality, competitive position, and industry trends. Market sentiment, interest rates, and economic conditions can influence prices in the short term. Since no single method is perfect, combining multiple approaches helps form a more balanced and realistic view of a stock’s true value.