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Anonymous

Hey I am on Medial • 4m

Only two things sustain a stock price 1. Future Earnings/Cash flow Power(going concern): This tells a company's ability to generate sustainable profits or free cash flow. Whether you're analysing a high-growth tech company or a high dividend-paying industrial giant, the potential for future earnings and cash flow dictates stock's trajectory. 2. Residual asset value (If the business ceases operations) If a company were to shut down tomorrow, what tangible value could be extracted from its assets after liabilities? This provides a safety net for the investor. First point determines how high a stock can go. Second point puts a floor to the stock price. Price also is effected by things like: a. Market sentiments b. Macroeconomic factors c. Compititive positioning d. Management quality e. Liquidity and demand But, all these will eventually have to lead to future earnings potential and/or residual asset value for the price to sustain.

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