For investors, fair value has two meanings.

In general, it refers to the value assigned to a stock by an individual investor or broker.
It can refer to the predicted price of a market in futures trading, which is reflected in the cost to open a position.

The fair value of a company's stock can be hotly debated among investors in many cases. Technology companies that show promise but do not profit, for example, may have varying fair values from different brokers and investors.

The fair value of a futures trade reflects whether the seller believes the market will rise or fall before the contract expires.

Fair value refers to the estimated intrinsic worth of an asset, derived from fundamental analysis, rather than its current market price. It reflects the price at which a willing buyer and seller would transact in a free and open market, assuming both have full knowledge of relevant facts.

In finance, fair value is calculated by evaluating factors such as cash flow, earnings, growth potential, market conditions, and comparable assets. It serves as a benchmark for identifying overvalued or undervalued assets.

For traders, understanding fair value is essential for informed decision-making. If an asset trades above its fair value, it may indicate overpricing, while prices below fair value could signal a buying opportunity, depending on the broader market context.