how value changes work
people often confuse a stock s value with its price it s common for individuals to believe they re one and the same while that s true to a certain degree there are some key differences between the two the price of a stock indicates its current or present value in the market put simply it indicates what the stock trades at or what it costs at any given moment in time 1value on the other hand refers to the actual worth of an asset including a stock the stock s value is determined by factors such as market share earnings and a number of other metrics 2 the price of a stock is normally at the same level or near its intrinsic value but changes can arise when the market rises or drops as noted above a value change is reflective of the total number of outstanding shares issued and currently held by investors as such it describes a type of calculation used to compare and evaluate investment instruments by taking the number of shares held by investors into consideration and since shares change hands every day the value change of a company s stock also changes daily 3one of the main reasons that the value change adjustment is so important is because it is intended to equally weigh individual stocks that are included in a group or category 3 for instance investors can group together a number of stocks in the financial industry consumer staples or retail sector and determine the value change of one company s stock compared to its peers the total number of outstanding shares doesn t include stock that has been reinvested by the company example of value changelet s use a hypothetical example to show how value changes work suppose xyz company has one million shares outstanding in the public market and decides to issue an additional million shares these shares will be issued to investors on the secondary market by doing this the company s stock price may undergo a value change that s because of the significant change caused by the doubling of the total number of outstanding shares 