Explaining Stocks to Kids: A Simple and Fun Guide (Part 2)

I wrote the book What Is a Stock? a few years ago for little kids. But I was pleasantly surprised to learn that many adults enjoyed it too! Some readers even told me they understood stocks better after reading a children’s book.

However, many of them asked for a deeper explanation, still simple and fun, but with a little more detail. I haven’t had time to write another full book about stocks yet, so I thought I would write this post instead.

If any part of this confuses you or your child, feel free to check out Part 1, or write to me.

Let's Use Apple Inc as an Example

Let's look at Apple, one of the most famous companies in the world. Its stock ticker is AAPL. A ticker symbol is simply a short code used to represent a company's stock on the stock market. Instead of writing "Apple Inc." every time, investors just type AAPL. Think of it like a nickname for the company on the stock exchange.

As of March 3, 2026, Apple stock is trading at about $263. That means if you want to buy 1 share of Apple, you would need to pay $263.

Imagine this: if you buy 1 share of AAPL today for $263, and tomorrow the price becomes $264, you could sell it and make $1. Not a lot, but hey, that is enough to buy a bottle of water! Although not enough to buy an In-N-Out burger. Hehe.

But the opposite can also happen. If tomorrow the price drops to $262 and you sell it, you would lose $1.

How Much Would It Cost to Buy Apple? As in the organic, non GMO kind of course! Just kidding…

What if you wanted to buy the entire company (Apple)? Would that cost $263? Nope. Remember, one share is just one tiny piece of the company. Apple has billions of shares. To know how much the whole company is worth, investors look at something called market cap.

What Is Market Cap?

Market cap (short for market capitalization) tells us the total value of a company in the stock market. Here is the simple formula:

Market Cap = Stock Price x  Number of Shares

Today Apple stock is trading at $263, and Apple has approximately 15 billion shares outstanding. So the company is worth roughly $263 × 15 billion, which comes out to about $4 trillion. That means investors believe Apple is worth about four trillion dollars!

Why Does Stock Price Change All Day?

Because people are buying and selling stocks all day long, and the price is just whatever someone is willing to pay for it at that moment.

This is called supply and demand. When more people want to buy something than sell it, the price goes up. When more people want to sell than buy, the price goes down. It works this way for almost everything, sneakers, concert tickets, trading cards, and yes, stocks too.

Think of it like a trading card at recess. Imagine everyone suddenly wants the same rare card. Whoever has it can charge more because so many people want it. That is high demand. Now imagine nobody wants that card anymore. You would have to lower the price just to get someone to take it. That is low demand.

Stocks work exactly the same way. If lots of people want to buy Apple stock, the price goes up. If lots of people want to sell it, the price goes down. This happens thousands of times every single minute during the trading day, which is why the price never sits still.

So why do people suddenly want to buy or sell? All kinds of reasons.

Apple announces a brand new iPhone → people get excited → everyone wants to buy → price goes up

Apple says they are not making as much money as expected → people get worried → everyone wants to sell → price goes down

Sometimes it is just the news, the economy, or even the mood of investors that day.

At the end of the day, the stock market is just millions of people making decisions about what they think a company is worth.

Outstanding Shares

When a company is created, it splits itself up into millions (or billions) of tiny pieces called shares. Each share represents a small piece of ownership in that company. Outstanding shares are the total number of those shares currently being held by anyone out there, regular investors, big investment firms, company founders, executives, and employees.

The one thing that does not count is treasury stock, which are shares the company bought back and is holding onto itself. Since the company owns them, they do not count as outstanding.

Outstanding Shares = Issued Shares - Treasury Shares.

This number matters because it tells you how many slices of the company are actually out there in people's hands. 

Think of it like a birthday cake. Mom bakes a cake and cuts it into 8 slices. She hands out 6 slices to friends and family, but keeps 2 slices back in the kitchen.

The 2 slices sitting in the kitchen = treasury shares

The 6 slices in people's hands = outstanding shares

Outstanding shares are simply the slices that are out there in people's hands, not sitting in the kitchen.