I just got into a heated argument with ChatGPT trying to understand how stock prices are actually determined (and not just some basic explanation of supply and demand, I want to actually understand the mechanism).
So I asked him, suppose a stock is trading at 100$ and I want to offer to buy it for 200$, why can't I do it?
He said "because no one is offering to sell it for 200$".
But I find it hard to believe that in the whole world no one is willing to sell his 100$ stock to me for 200$ and make an instant 100% profit.
Which means, there is something in the mechanism that prevents me from buying the stock at 200$, and that is exactly what I want to know.
I find it embarrassing to be asking this after 8 years of investing, but I always thought that the stock price is determined by market cap divided by number of shares, which means for a stock to double in value, there needs to be an inflow of money equivalent to the existing market cap, or the shares outstanding need to be reduced by half.
But during my conversation with ChatGPT, he said that this is not true and that a stock price can double by a few trades and not necessarily by injecting double the market cap in real money into the company.
I hope I made myself clear as to what exactly I'm asking.