The causes of the rise and fall of a company's stock price

Shares can be interpreted as an indication of the capital participation of a person or party (company) in a limited liability company or limited liability company. By entering this capital, the parties have a claim on the company's income, rights to the company's assets, and the right to participate in the General Meeting of Shareholders (GMS). Stocks are volatile and the prices of commodities and commodities in the market can fluctuate. The trick for some is if the market is static it won't attract investors, it can get very exciting and worrying when it suddenly turns red, but keep that in mind. Do not panic. In economic theory, the rise and fall of stock prices is a common thing, because it is caused by the forces of supply and demand. If there is more demand, the price will go up, and if there is more supply, the price will go down. In general, there are several factors that affect the rise and fall of a company's stock price. These factors can be divided into internal and external factors. Internal factors are factors that occur within the company. External factors are factors that come from outside the company.

External Factors

1.             Macroeconomic Environment These factors have a direct impact on the rise or fall of stock prices.

Examples:

•                An increase or decrease in interest rates by the Federal Reserve.

•                Changes in the benchmark interest rate of Bank Indonesia (BI) and the magnitude of imports and exports which directly affect the exchange rate of the rupiah against the US dollar. The rate of inflation is also included in the macroeconomic situation.

•                Security and high unemployment due to political shocks also have a direct impact on the rise or fall of stock prices. Apart from these factors, the relationship between bank interest rates and stock price movements is also very clear. When bank interest rates rise, the price of listed shares tends to fall. There are several possibilities for this. First, when bank interest rates rise, many investors shift their investment to bank products such as deposits. If interest rates rise, investors will earn more. Second, when bank interest rates rise, businesses tend to minimize losses from rising costs. This happens because most businesses have debts to banks.

2.             Fluctuations in the Rupiah exchange rate against foreign currencies Fluctuations in the Rupiah exchange rate against foreign currencies often cause stock price fluctuations on the stock exchange. Logically, it makes a lot of sense. As a result of exchange rate fluctuations, it can have a positive or negative impact on certain companies, especially those with foreign currency debt. The depreciation of the exchange rate has hurt importers and companies with foreign currency debt. This will lead to higher operating costs and lower prices for automatically offered shares. For example, when the rupiah exchange rate weakens against the US dollar, the stock price of the Jakarta Composite Index (JCI) often falls.

3.             Government Policy Although the policy is still in the discussion stage and has not yet been implemented, the government policy may affect stock prices. There are many examples of government policies that cause stock price volatility, such as import/export policies, corporate policies, debt policies, and foreign investment policies.

4.             Panic Factor Certain news can cause panic in both the stock market and the stock market. This panic forced investors to float (sell) their shares. Back to the law of supply and demand. In this situation, the stock price will fall due to selling pressure. In the panic selling phenomenon, investors want to sell shares quickly, regardless of the price, for fear that the price will continue to fall. This behavior is driven by emotion and fear rather than rational analysis. Avoid selling the stock as this will cause panic. First, analyze the stock you want to sell to see if it still has value in principle. Owning a good stock is like owning a small part of a good and honest company.

5.             Market manipulation factors The source of stock price fluctuations can also be caused by market manipulation. Market manipulation is usually carried out by sophisticated investors and big capitalists who use the mass media to manipulate certain conditions for their own purposes by making stock prices lower or higher. These are often called rumours. However, causes due to this factor are usually short-lived. A company's fundamentals are reflected in its financial statements, which guide its share price.

Internal factors

1.             the basics of the company The company's fundamentals are the main factor that drives the ups and downs of stock prices and must always be considered in investing in stocks. Shares of companies with good fundamentals boost stock price trends. On the other hand, shares of companies with poor fundamentals cause a downward trend in stock prices.

2.             Corporate action Action The corporation here is in the form of management guidelines. The effect can change the fundamentals of the company. Examples of corporate actions include acquisitions, mergers, rights issues, and sales.

3.           Forecasting the company's performance in the future The results or results of a company are    used as a reference by investors and fundamental analysts in evaluating company shares. Some of the most important factors are cash dividends, debt, book value ratio (PBV), earnings per share (EPS), and company profits. Companies with a high dividend payout ratio (DPR) tend to be favored by investors because they can generate higher returns. In practice, the DPR influences share prices. EPS also contributes to stock price volatility. Higher earnings per share will encourage investors to buy the stock, so the stock price will be higher. Leverage ratios and PBV levels also have a significant effect on stock prices. Companies with high leverage ratios tend to be growing companies. Companies usually actively seek funding from investors. However, such companies are usually also in demand by investors. If the results of the analysis are good, the stock will be capitalized in the future and will bring a high return.