A stock is a tiny piece of ownership in a company. That's it. When you buy one share of Apple, you own a very small fraction of Apple Inc. You're a shareholder. The company literally reports to you (and millions of other shareholders) every quarter.
Why does owning a piece of a company make you money? Two ways: the stock price goes up (so your piece is worth more), and some companies pay dividends (a portion of profits sent directly to shareholders).
A stock's price reflects what the market collectively thinks the company is worth. If a company is worth $1 trillion total and has 15 billion shares outstanding, each share is worth about $66.
The price moves based on supply and demand — which is driven by how the company is actually performing, how investors expect it to perform in the future, news, broader economic conditions, and yes, sometimes just sentiment and hype.
Stock prices in the short term are basically chaotic. A company can be profitable and its stock can drop. A company can be losing money and its stock can go up. Short-term price movement is very hard to predict. Long-term trends (over 10+ years) are much more predictable — which is why most beginner investors are better off holding broad index funds instead of picking individual stocks.
Good earnings — if the company makes more money than expected, the stock usually goes up.
Revenue growth — growing revenue is often more important than profitability for growth stocks (think early Amazon — barely profitable for years, but revenue growing fast).
Optimistic future outlook — if a CEO announces something exciting (new product, new market, acquisition), investors buy in anticipation.
Macro factors — interest rates, inflation, economic conditions affect all stocks. When the Fed raises rates, growth stocks often fall because future earnings are "worth less" in calculations.
The opposite of everything above, plus: bad news, scandals, lawsuits, competitor disruption, and sometimes just broader market panic where everything drops at once.
When everything drops at once (like 2020, 2022), that's not a signal to sell — it's usually a signal that the market is on sale. Long-term investors who stayed put and kept investing during crashes came out ahead when the recovery came.
Buying individual stocks is a bet on a specific company. Buying an index fund is a bet on the overall market. Most research shows most investors (including professionals) don't beat the market consistently by picking individual stocks over long periods.
That's why the common beginner recommendation is: start with index funds (VOO or FXAIX), build your investing habit, and if you want to play with individual stocks later, do it with a small percentage of your portfolio you're comfortable potentially losing.