The answer comes down to a simple mechanism once you understand it: listing. Here's how it works, and what really makes prices move.
What is a stock listing?
Shares represent portions of the capital a company issues in exchange for the financial contribution of its shareholders. Their price changes constantly, driven by the buy and sell orders placed by investors at every moment. A stock is said to be "listed" once it can be traded on an organized financial market.
What is an initial public offering (IPO)?
An initial public offering (IPO) is the moment a private company opens part of its capital to the public by issuing new shares: individual investors can then buy them, and the company's shares begin trading on a public exchange (for a detailed look at the process, see the SIX Swiss Exchange guide).
Before going public, a company remains privately held. At this stage, its shareholders are typically limited to a small circle: founders, people close to them, and professional investors such as venture capitalists or angel investors.
Going public marks a turning point in a company's life, since it opens access to substantial capital. These new financial resources support its development plans and expansion. Being listed also strengthens the company's transparency and credibility, which can help it negotiate more favorable financing terms.
The price set for the shares of a company going public results from thorough prior analysis. At the moment of listing, shares previously held by private shareholders become public shares, valued at the market price. This process can also come with specific clauses governing how private shares convert into public ones.
How stock listing works in practice
Once a company is listed, two main listing methods coexist on the markets:
Continuous trading applies to most listed companies, particularly large caps: companies whose market value ranks among the highest and whose shares trade in very high volumes. The share price then updates live, refreshed with every new order sent to the market. This is the method used for most major stock indices (S&P 500, CAC 40, SMI).
Fixing, or auction trading, applies more to smaller companies, or small caps: companies with a more modest market value whose shares trade far less often. Without enough order flow to update the price continuously, the price is only set at one or two specific points in the day: once for a single fixing, or twice, at the open and then the close, for a double fixing.
If you'd like to dig deeper into the difference between large and small caps, our article on small caps versus large caps explains it all in detail.
What factors influence a stock's price?
A stock's price level directly affects a portfolio's performance: when the price rises, the investor benefits from a potential gain, while a drop can translate into a loss if they need to sell in a hurry. In practice, these same factors explain why the value of your own portfolio can shift from one day to the next, even if you haven't changed anything about your positions. If all of this still feels a bit abstract, don't worry, most beginning investors feel the same way. This is exactly why we designed our Foundations program: to lay these fundamentals calmly, at your own pace. In the meantime, here are the main factors that help explain how a stock is likely to move:
● The company's financial strength, as reflected in its results and annual reports
● The overall economic environment, including interest rates, inflation, and growth
● The political climate, including elections, reforms, and geopolitical tension risks
● Exceptional events, such as natural disasters or health crises
Understanding these factors doesn't allow you to predict the market, but it does help you make sense of your portfolio's movements rather than reacting in a panic to every fluctuation.
Frequently Asked Questions
What does it actually mean for a company to be "listed on the stock market"?
It means its shares can be freely bought and sold on an organized financial market, with a price that moves based on investor supply and demand.
What's the difference between an IPO and simply buying shares on the market?
The IPO is the one-time event during which a company opens its capital to the public for the first time and begins trading on the stock market. Buying shares afterward, on an ordinary trading day, simply means acquiring shares that already exist from other investors on the market.
What's the real difference between continuous trading and fixing?
Continuous trading updates a stock's price in real time with every new order, which is typical of large, heavily traded companies. Fixing only sets the price once or twice a day, which suits smaller companies whose shares trade less frequently.
Can a listed stock's price change outside market hours?
The official price only updates while the market is open and orders are being executed. Outside those hours, news and events can still shape how the stock is expected to move once trading resumes.
Does a stock's price always reflect the company's real value?
Not necessarily. The price reflects what investors are willing to pay at a given moment, which depends on their expectations, the overall market climate, and outside events, not solely on the company's financial fundamentals.
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The information presented in this article is provided for informational and educational purposes only. It does not constitute personalized advice, investment advice, or an offer or solicitation to buy or sell financial products.
Any investment decision should be made after a thorough analysis of your personal situation, your objectives, and your risk profile, and may require the advice of a licensed financial advisor.
Past performance is no guarantee of future results. Investments carry risk, including the risk of capital loss.