is this a universal truth? just because a stock price is lower is it easier for it to increase substantially? assuming the company is healthy and all variables between companies are similar.
2007-10-15 12:20:12 · 8 answers · asked by Anonymous in Business & Finance ➔ Investing
Yes, but it would be more correct to state that lower priced stocks (with a low float) can move faster IN EITHER DIRECTION.
2007-10-15 15:29:21 · answer #1 · answered by Anonymous · 0⤊ 0⤋
No. While high stock prices may keep many individual investors from buying, the vast majority of stock trading volume comes from institutional investors anyway. These guys have deep pockets and couldn't care less if a stock is 8 or 800/share, as long as the other factors indicate that it is a good stock to buy. The A class shares of Berkshire Hathaway used to be 12/share, now over 110,000/share. Google started at 75, too rich for some people's blood because it's difficult to buy a decent number of shares when you've only got a few thousand to play with. The institutional investors, the one's who really move the stock prices, will look at the P/E and other ratios so that stocks of different cost can be compared with the same criteria.
2007-10-15 12:37:53 · answer #2 · answered by zzgorch 3 · 0⤊ 0⤋
Yes and no. It shouldn't matter because the financials will dictate much better what the stock should do. But some investors might not have much money to buy an expensive stock. Not really but it can be a variable.
If the $140 stock is a stronger company than the $8 stock, then I am going with the $140 one. Really, stock price isn't that important
2007-10-15 12:30:44 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Companies believe that if their stock is too expensive, people will not buy it. It also makes it awkward to give stock bonuses to their employees (if your stock is $300 a share, how do you give a $450 bonus?)
So many companies will look at their stock and if it has gotten upwards of about $100 a share, they will split it, especially if they think the company's growth will continue to drive up the price. A common split is 2:1, giving owners 2 shares for each one they own, but others have been done. The market often responds in the belief of growth and after the split, the two shares are worth more than the one - e.g. after splitting a $120 stock might be worth $63 each part.
2007-10-15 12:45:20 · answer #4 · answered by Mike1942f 7 · 0⤊ 0⤋
I don't think a generalization can be made. Stock prices depend on many variables like growth rates, future prospcects, dividends, sales per share, earnings per share, price-earnings ratio and other factors.
I never would have thought Google would get over $600 a share either when it was $300. Many other internet companies did not double in price (although I am doubtful about the value end of it).
2007-10-15 12:25:41 · answer #5 · answered by BAL 5 · 0⤊ 0⤋
If you had compared a $14 stock to a $140 stock, I would say that there isn't any difference at all.
However, I have heard that some mutual funds or institutional buyer can't buy stocks under $10/share.
2007-10-16 17:03:18 · answer #6 · answered by Tom H 4 · 0⤊ 0⤋
No, it's not. It's more about market cap. If there are 100,000 of an $8 stock... It would be identical to 20,000 shares of a $40 stock.
Stocks with lower market caps are more volatile.... The stock price is irrelevant.
2007-10-15 12:32:35 · answer #7 · answered by Anonymous · 1⤊ 1⤋
yes i believe so. if all things are equal. more people can afford to buy between $8 -$16 then $140-$280.
2007-10-15 15:20:02 · answer #8 · answered by bizzbagg 4 · 0⤊ 0⤋