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How Are Stock Prices Determined?

Stock prices could determine whether you retire in comfort or you'll need to keep working for a few years. Here's how they work.

By Lou Whiteman – Updated Jul 2, 2025 at 9:37PM | Fact-checked by Frank Bass

Key Points

  • Stock prices fluctuate based on supply and demand influenced by investor actions and sentiment.
  • Long-term value is dictated by a company's earnings, impacting stock prices as markets assess true value.
  • P/E ratio is used to assess if a stock is priced fairly compared to historical earnings data.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

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