Supply, Demand, and Price

What Makes Share Prices Move?

Share prices are driven by the basic economic principle of supply and demand. If more people want to buy a stock than sell it, the price goes up. If more people want to sell than buy, the price goes down.

What Drives Demand?

• Good earnings — If Safaricom reports record profits, more people want to own it
• Positive news — New products, expansion plans, strong management
• Economic conditions — When the economy grows, company profits tend to rise
• Dividend announcements — Generous dividends attract income-seeking investors

What Drives Supply (Selling)?

• Poor results — Falling profits or losses make investors nervous
• Bad news — Scandals, regulatory issues, management changes
• Better alternatives — Investors may sell to invest in something else
• Need for cash — Some investors sell simply because they need money

Every trade has a buyer and a seller who agree on a price at that moment. The last traded price is what you see displayed as the current share price.