A stock or equity is a piece of a company that is purchased and held by an owner. Stocks find themselves to the hands of the public either privately, from business to consumer, or publicly – on a stock exchange, where individuals trade ownership between one another. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares
Companies see for their valuation and image to increase with increases in prices of their shares. Any percentage changes in a stock price will result in an equal percentage change in a company’s value.
After an initial public offering, stock prices and company valuation are on the hands of the consumers/owners that trade among themselves. Initially, the money gained from selling stocks and/or shares see for increases in revenue for the company, but every trade after that, does not effect the company’s balance sheet. A lot rides on stock performance. It is generally understood that company’s that show good health, growth and output see for equally as healthy stocks. The effects of one company can be monumental for others.
On launch day of Apple’s monumental iPhone X, as with other large product releases, Apple had opened their week 1.6 percent higher. Despite the large price tag, demand for the new device has surged past Apple’s expectations. With that – to meet demand, suppliers much work harder, in order for the tech giant to be able to produce enough to meet demand.
Shortly after trading had commenced, chipmaker Dialog Semiconductor rose 6.5 percent. And, chipmaker STMicroelectronics, also rose more than 3.5 percent in early trade. Alongside the aforementioned business’, many other component manufacturers had seen for increases in stock performance.
As I one day hope to be an investor, I personally find such things rather interesting. The increases in revenue that comes to the component manufacturers through Apple’s increased supply requirements do not effect their stock prices. Instead, due to Apple’s success – other company’s see for increases in stock prices on the market. These changes are driven simply by supply and demand.
Once Apple sees for a need to increase supply, other suppliers benefit from the increases in their revenue. The growth in their balance sheets, and the likes, garner greater interest from the general public. This heightens demand, and as a cause of this, more stock is purchased. This is what is observed in this case. And it may be safe to assume, that as Apple continues to grow demand for their products, the share prices of many of their suppliers should increase.
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Sources:
Reid, D. (2017, October 30). Shares of Apple suppliers ride high after strong iPhone X demand. Retrieved November 12, 2017, from https://www.cnbc.com/2017/10/30/apple-supplier-stocks-jump-after-strong-iphone-x-demand.html
