Discussion on question by Vic: Can the stock price go up even if no one is buying?

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09:44

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Q: Can the stock price go up even if no one is buying?

Let's assume there's this random company (XYZ)--that few are aware of--is selling stocks and they're doing really well. If their stock price is at $50 and no one is buying, will it still go up? Do stock prices only go up when people are buying?

RonJohn

Since it's a publicly traded company, someone will know about it. Thus, the "no one knows about (it) and they're doing REALLY well" scenario is impossible.

Vic

it's a hypothetical question

RonJohn

Impossible scenarios are for WorldBuilding, not Money. The first paragraph is superfluous and leads the reader down an unnecessary path.

JBentley

@RonJohn To be fair, you made an assumption that it is a publicly traded company, which isn't actually stated in the question. We could be talking about a private company (or perhaps a company traded on an obscure exchange), in which case the OP's otherwise strange premise is actually a little more plausible.

RonJohn

@JBentley is stock in private companies even allowed to be traded on the open market? That's the definition of a publicly traded company. (Yes, I know there are privately owned corporations -- my family owned one for decades -- but the share value can only be determined by a due diligence analysis of the books by the prospective purchaser.)

JBentley

09:44

@RonJohn Allowed, sure. If it meets the criteria of the regulating authority and the rules of the exchange (at which point, as you say, it will become a publicly traded company). But my point was merely that the OP didn't specify that we're talking about the "open market". For all we know the OP is considering buying shares in a private company, and the "price" was the issue price.

RonJohn

@JBentley "For all we know the OP is considering buying shares in a private company, and the "price" was the issue price." but as I stated before, the price of shares in a private company is not decided by the market, as assumed by the Question. Here's a link which discusses the effort required in selling shares in private companies: investopedia.com/ask/answers/06/privatecompanystock.asp

PlasmaHH

There are various "prices" like mid price, indicative price etc. so it really depends on what your definition is here, but since the goal usually is to try to sell stuff at that price, you can't really know unless you tried to sell. or buy.

Christian Palmer

As other answers have said, you're not going to make money on the stock in the (very) hypothetical scenario that nobody is buying. But your question implies that people are selling. You could try to buy up enough of the shares to put yourself on the board - companies that are performing excellently tend to reward their directors.

Michael Kjörling

@RonJohn This question would not be on topic for Worldbuilding as there is no worldbuilding involved.

RonJohn

@MichaelKjörling I think we could shoehorn imaginary price changes into "How to achieve a specified effect in a defined world, including by the use of biology, technology or magic, while maintaining in-universe consistency" :)

Prince M

09:44

I am not a regular user on “MoneySE”, but I don’t see why this question seems ill received just because the scenario is so improbable. I like the question, not because I’m learning about “what to do in the case no transactions taking place for a stock” but because the hypothetical scenario is helping the OP (and me) make sure we know exactly what causes a stock price to fluctuate. If you’re going to build an investment strategy with the goal of making Money and making money directly depends on the fluctuations of stock prices - knowing the mechanics of the fluctuations seems like a good idea

In my experience, there are times when figuring out the answer to extreme hypothetical questions can save the person from having to ask 10x as many questions about realistic scenarios, because the answers follow from the extreme cases

J...

Related : Bid-Ask Spread

Tony

@Vic What you are asking is like dividing by zero... Price won't really be defined until someone buys.

blankip

@RonJohn - I used to give courses on this subject. Just because you don't understand something doesn't make it mythical. Also the 25 upticks on your comment does show some ignorance on the site.

The Great Duck

@RonJohn you are being needlessly pedantic. Obviously someone knows the company exists. I think what they are asking is whether or not the value of a stock can change without people buying or selling the stocks. They say nobody knows about the company but they are obviously meaning to say that almost nobody knows about it from a trading standpoint. That does not mean there is any "magic" involved. Companies like Microsoft became incredibly valuable almost overnight yet this wasn't due to an increase in demand in stock. It was due to the company itself flourishing.

RonJohn

@TheGreatDuck And why do you think there was "an increase in demand in stock"? Because "it was due to the company itself flourishing."

Trilarion

09:44

Is the moon there if nobody is looking? If yes, then stock prices can change even if nobody is buying or selling.

The Great Duck

@ronJohn did you even read my post? You took that first quote completely out of context and deliberately twisted my words to say something completely different. I thought before you might just be a bit pedagogical about the wording of the question but now you're just being downright rude.

RonJohn

@TheGreatDuck I did read your "Companies like Microsoft", and made my comment specifically because I think the last sentence makes zero sense.

Jer

You should clarify what you mean by "no one is buying." It is entirely possible that days go by without any trades - this happens regularly in illiquid options, for example. But there will be bids and offers (usually far apart). So depending on what you mean, you could say that yes, no one is buying (because there hasn't been any traded, and thus no one has bought the stock/option), but you could also say that people are buying (because there are bids).

The Great Duck

@RonJohn the price of stock is the measure of the value of a company. Excessive demand can cause the stock to increase by popular demand. However, a company can also go up in value simply because the company is making a boatload of profit and exploded into a major business almost overnight (similar to how microsoft pretty much became famous overnight with the invention of Windows). That still doesnt excuse you misquoting me and saying that "I said there was an increase in demand for stock". I said there wasnt an increase in demand. Hence you misquoted me and took words out of context.

RonJohn

@TheGreatDuck "I said there was an increase in demand for stock". (Pause to go back and read it a third time.) Hmmm. You're right.

The Great Duck

09:44

@RonJohn indeed. See now why I said your comment didn't make much sense? XD

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Discussion on question by Vic: Can th…