How does the stock price react to different news concerning a company??
I tried to be logic about it, meaning, good news: stock goes UP. bad news: stock goes down. But I realized it is not always the case. any explanataion?
Answer:
it isn't the news itself, but deviations from expectations that causes stock prices to move. For example, if earnings went up by 10%, but the market expected 15%, then the stock price would decline, all else being equal, even though earnings increased.
well in theory you are correct, however you may interpret news as good while others may interpret the same news with a different perspective
ALSO
you may not be on the same timeline as other investors
for example you may hear of a new appointment for a gold mining company that sounds like good news and think stocks should go up, while investors may have known about that weeks or months ago and infact get early indication that a survey has just come up dry and so their reaction (price decline) is actully regarding some other criteria, the event just happened to coincide
In a perfect world you world be correct in your assumptions, but this is of course just not the case. All investors are not alike and interpret news differently. For example bad news for a company short-term may indeed have a negative affect via shareholders being nervous and cashing out, but to another investor this is an opportunity to buy which can pushthe demand for the stock higher than before the negative announcement. There are endless reasons for swaying in stock prices and many do not involve only the company per se, but rather the entire economy or an industry has significant influences as well.
Yes to everything, but your a small potato and it's the big boys that are moving these stock.
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