How does share price change with supply and demand?

Hi Binny,

Taking a hypothetical situation, say the net income of the company is good as it is making good profit. But due to some reason(example- due to the death of the owner of the company), the share holders start selling their shares frantically. How will it affect the value of the shares?

Is the value of the share completely dependent up demand and availability of the shares in the market? Like if the demand goes up, the price value of the share goes up and vice-verse?

1 Answer(s)


Pradyut, No matter for whatever reason, if a big % of shareholders start dumping their shares in the market the share price will go down. Case in point is when Apple share prices went down due to Steve Jobs health.

Well, share price is a combination of the fundamentals of the company and the demand-supply equation in the company. The fundamentals generally make sure that the share trades within a range. Between that range movements could be largely demand supply based.