When buying a stock, most beginners will first look to the “share price” to determine whether they should buy it. This is a false idea behind investing, and let's talk about the different reasons that share price doesn't actually matter. Usually, there are 3 different ways that investors wrongly view the share price: 1. "The share price is low/high so it must be cheap/expensive" 2. "The share price is growing/falling so it must be getting cheaper/more expensive" 3. "I project the share price will be XYZ by 2030" These all come from false ideas of how share price works, let's break them down and why they're false. Number 1 is pretty clear, this is a common idea for very new investors who don't understand the share price; Whether or not a share price is $10 or $500, it doesn't reflect a stock’s value. It also doesn't determine the size of a company because stocks can go through splits and change their share price. Market Capitalization is how "big" the company actually is by taking outstanding shares and multiplying it by the share price. What actually determines if a stock is cheap or expensive is the underlying BUSINESS. A stock is not just a graph, it's simply the representation of a real business through share ownership on the stock market. There is a real business that is growing or shrinking alongside the share price. If a share price is a small number, all it means is that the share price is a small number. It has no indication of the actual business itself, it's simply how much it costs to buy a share. $AMZN is currently over $200 a share, and $AAPL is over $300 a share, that doesn't make Apple anymore expensive, it's simply the cost of 1 share. $XEQT is also not cheaper than $VFV just because the share price is less than $50. Number 2 is a commonly misunderstood concept that when the share price lowers or increases that the stock is automatically more expensive or cheaper. The share price isn't always directly tied to how the business is performing. There could be outside macro factors, sector risks, or other sources that are reflected in the share price. The business itself may either move with or against it's earnings on the market. Many growing businesses often see the share price reflect the opposite. For example, SAAS companies have continued to grow internally, while externally the market thinks they aren't going to keep up with AI. $ADBE and $CSU are 2 companies that while may seem like they're "growing" as a business, the share price hasn't reflected it. That's because there is an outside or macro force acting on the market to determine the share price shouldn't go up alongside the business. There are all kinds of things that directly affect the share price like this, and it's impossible to know why the share price is growing/shrinking at any given point. While over the long term the earnings of a business always matter, there are many many other risks involved that change a stock price not how you might expect it to. Number 3 is also a very common one I see on Blossom and it's important to understand. Many investors like to make massive claims about what we call a "Price Target". All that means is it's a prediction of what the share price will be after a certain time. I could say that my price target for $GOOGL is $1000 by 2028. The problem with this is there's absolutely no evidence or research to back this up whatsoever. Investing analysts are famous for giving price targets on every stock in existence, the problem is they are more often wrong than right. Now how about the people on Blossom, these are often new investors who don't fully understand the concept of share price movements. What's bad about price targets and claims like "Stock A will reach $500 in 5 years", is that the share price can move totally opposite from the business, and it's influenced by other factors like I mentioned. It also doesn't matter the amount of research you do and whether or not it's accurate, the share price could move away from the underlying earnings. If you looked at the price of $CSU and it's earnings over the past 10 years, you probably could gave given a price target well above $5,000 for 2026. However, as we have it that's not the case and the share price is half of that. Not because that wasn't a reasonable assumption, but because simply it was completely unknown what the stock would do. Many investors also don't even do this research and it's more harmful. You can tell me your price targets on anything, but if all you do is post the share price and say something like "Thank me later", then you're simply convincing beginners into buying something they have no knowledge of. It's impossible to predict share price movement, if it was anybody could be the best investor and therefore nobody would be the best investor. This is why it's much more important to focus on your long term strategy, and less on the movement of a stock price. Don't be fooled into thinking you can accurately predict the price of a company just because you see something online. As always, do your research and happy investing!
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