What is Price Share ?

In investment in stocks, the price share is considered very important because it can provide an objective measure of the value of a company. If the price share of a company rises, the company has good corporate value, so investors are interested in investing their capital and the shareholders of the company will get a return on the shares they have. Conversely, if the price share in the company goes down it will also reduce the value of the company, so investors will get a loss on the capital they plan  ted, this is commonly referred to as risk in investing.

Price share is the value that exists at present which is the price of shares in the capital market and the price can change every second depending on the demand and supply that occurred at that time. Changes in stock prices are influenced by several factors both external and internal factors, which are caused by investors’ wishes or expectations of the profits they earn and also the return on the value of their investment that has been issued at this time.

Factors Affecting Stock Prices:

There are several conditions and situations that determine which stock will fluctuate:

1. Micro and macroeconomic conditions.
2. The company’s policy in deciding to expand (business expansion), such as opening a branch office (brand office), sub-branch offices (sub-brand offices) whether opened in domestic or overseas.
3. The sudden change of directors.
4. The existence of directors or commissioners of companies involved in criminal acts and the case has entered the court.
5. The performance of the company continues to decline in every time.
6. Systematic risk, which is a form of risk that occurs thoroughly and has contributed to the company’s involvement.
7. The effects of market psychology that were able to suppress technical conditions of buying and selling shares.

According to Darmadji & Fakhrudin (2012: 102), a piece of stock has a value or price and can be divided into three, namely:

1. Nominal price

The nominal price is the value stated on the stock sheet whose amount is determined in the company’s Articles of Association. The nominal price is largely a low estimated price, which is arbitrarily imposed on the company’s shares. This price is useful for determining the price of “ordinary shares issued”. The amount of the nominal price gives the importance of the stock because the minimum dividend is usually determined based on the nominal value.

2. Initial price

This price is the price recorded on the stock exchange. The stock price on the primary market is usually set by the emesis guarantor (underwriter) and issuer. Thus, it will be known how much the share price of the issuer will be sold to the public usually to determine the initial price.

3. Market price

This price is the price set on the stock exchange for public company shares or estimated prices for companies that do not own shares. In the stock market, this number changes every day in response to actual or anticipated results and overall or sectoral market sentiment as reflected in the stock market index. It also shows that the main goal of management is to ensure the best possible price under any conditions.

To see the price of shares issued cheap or expensive, can be analyzed with fundamentals analysis using the market ratio

1. Price Earning Ratio

The price/earnings (P/E) ratio is commonly used to assess the owners’ appraisal of share value. The P/E ratio measures the amount that investors are willing to pay for each dollar of a firm’s earnings. The level of the price/earnings ratio indicates the degree of confidence that investors have in the firm’s future performance.The higher the P/E ratio, the greater is investor confidence. The P/E ratio is calculated as follows:

2. Price Book Value Ratio

The market/book (M/B) ratio provides an assessment of how investors view the firm’s performance. It relates the market value of the firm’s shares to their book—strict accounting—value the higher the PBV value the more expensive the price share. To calculate the firm’s M/B ratio, we first need to find the book value per share of common stock:

Summary

Price share is one of the things that most investors pay attention to, price share can show the value of a company. Moving stock prices quickly is caused by large demand and offers from investors. Investors can see whether the price of the stock is cheap or expensive, one of them is by looking at the value of PER and PBV, the higher the PER and PBV value of a company, the higher the value of investor confidence which results in the company’s share price more expensive.

Refferences

Darmadji, Tjiptono, dan Fakhrudin. Pasar Modal Di Indonesia. Edisi Ketiga. Jakarta: Salemba Empat. Fahmi, Irham. 2012.

Fahmi, Irham. Analisis Kinerja Keuangan. Bandung: Alfabeta. 2012.

Gitman,, Lawrence J. principles  of managerial finance. Tenth edition. Addison-Wesley Longman, Incorporated. 2002.

https://parahita.wordpress.com/2008/11/15/bagaimana-cara-menentukan-harga-wajar-saham/

https://ekbis.sindonews.com/read/1308248/32/reliance-beri-rumus-menghitung-harga-saham-murah-atau-mahal-1527065607

https://www.investopedia.com/

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