What Makes a Stock Price Go Up?

Learn why the stock market and individual stocks tend to fluctuate.

By Rachel Warren – Updated Oct 30, 2025 at 5:24 PM | Fact-checked by Parker Hicks

Key Points

Stock prices change due to supply and demand dynamics during transactions.
Investor sentiment on a company or industry can drive stock prices up or down.
Long-term value is based on a company's potential future earnings, not short-term noise.

In the short term, stocks go up and down because of the law of supply and demand. Billions of shares of stock are bought and sold each day, and it's this buying and selling that sets stock prices.

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An infographic explaining different factors that affect stock prices. — Image source: The Motley Fool.

Imagine there are 1,000 people willing to buy one share of stock XYZ for $10, but there are only 500 people willing to sell one share of XYZ for $10. The first 500 buyers each snag a share for $10. The other 500 buyers who were left out then raise their offer price to $10.50. This higher offer price persuades some owners of XYZ who didn't want to sell at $10 to sell at $10.50. The stock price is now $10.50 instead of $10 since that was the price of the latest transaction.

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Pattern Day Trader

The Financial Industry Regulatory Authority, or FINRA, defines day trading specifically as buying and selling the same security on the same day in a margin account.

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About the Author

Rachel Warren is a contributing Motley Fool stock market analyst covering pharmaceuticals, biotechnology, medical devices, information technology, and consumer goods. Prior to The Motley Fool, Rachel was a paralegal and legal administrator. She holds a bachelor’s degree in paralegal studies from Liberty University School of Law.

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Rachel Warren has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.