Markstrat - What is the formula for the Share Price Index (SPI) ?

Stock Price Index (SPI), is a simple measure used to monitor the variation of your stock price and to compare it with those of your competitors.

SPI = Current Market Capitalization / Market Capitalization in Period 0

All competitors start with an SPI of 1000 in Period 0.

 If SPI increases, the company has created shareholder value. If the SPI decreases, the company has reduced shareholder value.

Unfortunately, a simple 'Stock Price Index' formula does not exist. But there are ways to increase the stock price such as company’s growth and generating a high net contribution.

This can be achieved by increasing your market shares in growing segments of existing markets or by investing successfully in new markets, while driving the costs down. This cannot be accomplished without high level of R&D activities.

In summary, the main factors driving the Stock Price Index are: profitability, growth in revenues and market share, level of R&D activities