How much does one share cost? Essential stock valuation logic you must understand before investing

Many novice investors in the stock market often make the same mistake: not understanding how much a share costs, leading to misconceptions about the market. Some look at U.S. stocks trading at tens of dollars per share, while others see Taiwanese stocks costing hundreds of thousands of New Taiwan Dollars per share, and wonder why the difference is so big. In fact, this involves fundamental differences in trading units, trading volume, and market mechanisms. Today, let’s systematically break down the core logic behind stock pricing.

What Is Stock Price — The First Lesson Before Investing

Before understanding how much a stock costs, you must first clarify the definition of “stock price.”

The stock price refers to the real-time trading price of a stock in the market, representing the amount an investor pays to buy or sell one share of stock. Stock prices are not fixed; they fluctuate in real-time based on the transaction prices matched between buyers and sellers. As long as the market is trading, the stock price is changing — this is why the stock market is full of opportunities but also risks.

The unit of stock price varies by country. U.S. stocks are priced in USD, while Taiwanese stocks are priced in TWD. For example, on August 2, 2023, Tesla (TSLA) traded at $254.11 USD per share, while TSMC (2330) traded at 561 TWD per share. These numbers represent the price of “one share,” not “one lot.”

Here’s an often overlooked detail: par value and stock price are completely different. Par value (like the common NT$10 in Taiwan) is a historical accounting record reflecting the original capital contribution of shareholders. But stock price is determined by the market, influenced by company profitability, investor expectations, overall economic conditions, and more. No matter how a company adjusts its par value, it won’t change the market’s valuation of its stock.

The Secret of Trading Units — One Share vs. One Lot

Once you understand “how much is one share,” the next key is to understand “how much is one lot.” But there’s an important premise: Only in Taiwan is there a concept of “one lot”; in the U.S., the trading unit is simply “one share.”

For traders, this distinction determines how much capital you need to enter the market.

One lot equals 1,000 shares — meaning buying one lot in Taiwan is actually buying 1,000 shares. For example, TSMC’s stock price is 561 TWD; then, one lot costs:

561 TWD × 1,000 shares = 561,000 TWD

This amount is a huge barrier for most retail investors. To allow more people to participate, Taiwan’s market offers two trading modes: block trades (整股) and odd lots (零股).

Block Trading: The Traditional Minimum of 1,000 Shares

Block trading means buying or selling in units of “one lot” (at least 1,000 shares). This method has high liquidity and quick matching but requires a large capital. For TSMC at 561 TWD, buying one lot costs about 560,000 TWD.

Block trades are executed in real-time during market hours (9:00 AM to 1:30 PM), allowing immediate settlement. This is why professional investors prefer block trading — immediate execution reduces risk.

Odd Lot Trading: A Lower Barrier

Odd lot trading allows investors to buy or sell fewer than one lot (1–999 shares), breaking the previous minimum of 1,000 shares. You can buy 9 shares of TSMC for 5,000 TWD instead of pooling 560,000 TWD.

However, odd lot trading has lower liquidity. It uses a call auction mode, with matching once per minute during market hours and shorter after-hours matching (1:40 PM to 2:30 PM). Due to fewer counterparties, execution speed and fill rates are less favorable compared to block trading.

Practical Example: Calculating How Much One Lot of Stock Costs

Let’s use real data for illustration.

Example 1: U.S. Stock Tesla (TSLA)

On January 6, 2023, Tesla’s stock price was $101.81 USD. By August 2, 2023, it rose to $254.11 USD. In less than seven months, the stock increased by 149%. If you bought 1 share at $101.81, by August it would have more than doubled.

This shows the advantage of U.S. stocks: you can start trading with just $101.81 USD for one share, requiring very little capital.

Example 2: Taiwan Stock TSMC (1101.TW)

On April 30, 2024, TSMC’s stock price was 32.10 TWD per share. The cost of one lot is:

32.10 TWD × 1,000 shares = 32,100 TWD

Compared to Tesla’s $101.81 USD (about 3,000+ TWD), this is higher. But Taiwanese investors can choose odd lot trading, buying 100 shares for only 3,210 TWD, greatly lowering the entry barrier.

The Fundamental Difference in Trading Systems: U.S. vs. Taiwan

Why is there such a huge difference in stock prices between U.S. and Taiwanese stocks? The core reason lies in the design of trading units.

Taiwan’s “one lot” system originated from early market liquidity management and risk control needs. But with the introduction of odd lot trading, this threshold has been significantly lowered. Now, calculating how much one stock costs is less meaningful for retail investors, as they can choose between block and odd lot trading flexibly.

In contrast, U.S. stocks have always used one share as the trading unit, with low commissions (many brokers now charge 0), enabling investors worldwide to trade with smaller capital. This is one reason why the U.S. market has the highest liquidity globally.

Four Major Drivers of Stock Price Fluctuations

After understanding how to calculate a stock’s price, you should also know why stock prices change. The main factors influencing price movements are:

1. Company Fundamentals

Profitability, financial health, and growth prospects are key to long-term stock valuation. When a listed company releases strong earnings reports, announces new products, or signs major contracts, its stock price usually rises. Conversely, poor results or negative news can lead to declines. Investors analyze financial statements and industry trends to assess fundamentals.

2. Macroeconomic Environment

Indicators like GDP growth, interest rate policies, and unemployment rates influence overall markets. When central banks cut interest rates, investors tend to buy risk assets like stocks, pushing prices up. Conversely, rate hikes may cause market corrections.

3. Market Sentiment and Risk Appetite

Investor optimism or pessimism can cause short-term volatility. Negative news, geopolitical crises, or global shocks (like pandemics) can trigger panic selling, leading to sharp declines. Positive policies or good news can boost buying.

4. Technical and Chip-Flow Factors

Price trends, trading volume, and major shareholders influence short-term movements. When stock prices break key resistance levels, it can trigger buying waves, further pushing prices higher.

Final Tips Before Investing

Now that you understand how much a stock costs, how to calculate it, and the differences between U.S. and Taiwanese markets, here are some final points:

• Liquidity in Odd Lot Trading: While it lowers entry barriers, slow execution and wider spreads make it unsuitable for investors seeking quick trades.

• Transaction Costs: Taiwan’s commission rate is 0.1425% per side, totaling about 0.285%. For example, buying one lot of TSMC incurs roughly 1,600 TWD in fees, which is not negligible.

• Diversification: Regardless of stock price, avoid putting all your funds into a single stock. Building a diversified portfolio reduces risk.

• Long-term Perspective: Short-term volatility is hard to predict, but over the long run, stocks of good companies tend to generate positive returns.

Mastering these basics will help you make more confident decisions in the stock market.