Discussion Understanding Pricing of a Stock

Discussion: Understanding Pricing of a Stock You may have seen how financial news media provides real-time financial market reporting. They often produce stock-market news feeds for traders. This news feeds include a stock chart. The stock chart may include different filters that allow you to see how the stock is performing today or has performed over one or more years. Many factors can affect pricing. Those factors can't be controlled or accurately predicted. The approaches used to value stocks (determine what the stock is truly worth) are usually theoretical. You should consider what drives stock prices and why. The 52-week high-low pricing for Microsoft is $342.54 / $214.25. Microsoft’s financial statements demonstrated stability in the company’s financial health. They seem to have only recently encountered minor financial challenges that they currently have a handle on. Microsoft’s working capital for the most recent fiscal year quarter one (September 2022) slightly decreased from the same quarter one year ago (September 2021). However, Microsoft’s working capital is significantly higher than other firms in the technology sector, especially when compared to similar companies in the software infrastructure industry. The yearly trend for Microsoft’s working capital has remained stable over long periods, even during unpredictable impacts, such as the global economic slowdown in 2020. The company shows it can handle slightly increasing volatility in the market, especially with its high working capital. The company continues to invest and introduce new innovative technological advances all around the world. There are some factors though that are just too uncontrollable and are starting to influence Microsoft stocks. The main noticeable change is the fall in tech stocks in 2022, with the Nasdaq-100 Technology Sector index down 30% year to date as rising inflation and fears of a recession slow consumer spending (CSI Market, 2022). The PE Ratio for Microsoft has shown increasing concern over the last year along with its stock price. Some factors that could be impacting the PE ratio are interest rates, unemployment rates, and low levels of consumer and business spending. Although, I think it boils down to the investor’s strategy type when it comes to investing, the logic for investing in Microsoft lies in its proven financial success through time, even when competing with other tech giants such as Apple. Both Microsoft and Apple are promising companies with bright futures, but Microsoft is better suited for investors looking for a short-term buy. When the two tech giants are compared, Apple seems more fitted for a patient investor seeking a long-term buy.