Definition: The market value per share or fair market value of a stock is the price that a stock can be readily bought or sold in the current market place. In other words, the market value per share is the “going price” of a share of stock.
The stock market and economy changes every day and with it comes fluctuations in company stock prices. Newspapers like the Wall Street Journal or websites like Yahoo Finance report daily values of stocks.
A stock’s market value is largely influenced by not only the economy as a whole but also investors’ predictions and expectations.
Example
For instance, Microsoft issued another lackluster 2013 quarterly report. Investors are starting to lose faith in the giant tech company because of other competition in the market place. As a result of investors changing opinions, Microsoft’s stock fell another 8 points. In other words, the market value per share of Microsoft stock is 8 percent lower than it was before they issued their quarterly earnings report.
Many companies try to maintain their stock prices by issuing dividends to shareholders. General Electric is a great example. GE issues regular dividends to shareholders and has for decades. Because this is a steady trend for GE, investors know they will receive a GE dividend if they invest in the company. These dividends help create demand for the stock and demand eventually turns into a higher stock price. Some companies, like tech companies, rarely issued dividends if ever because they don’t need to encourage people to invest.
