0
I have been a broker for about 10 years. A stock drops on good news because it is following the old saying "buy the rumour, sell the fact".
The Stockmarket is all about expectations. You are always betting on a particular outcome.....sometimes it goes your way - sometimes not. Does the performance of a stock live-up to its expectation? That is why stocks move up and down...I hope that helps.
Wiki User
∙ 14y ago
Add your answer:
Earn +20 pts
How does stock price affect a company?
In the strictest sense of the word, not much. As long as the company does not run out of cash, then its stock price is irrelevant to the company's operations. However, stock price is a reflection of what the market thinks the company's equity is worth, and this has implications. So, here are some scenarios: If the stock price undervalues a company's equity... it will tend to attract buyout offers and hostile takeovers as people take advantage of the stock's low price. Also, investors will be unhappy with the stock performance and the CEO will not collect large bonuses. So CEO turnover is another symptom of a low stock price. And finally, underpriced stock will also tend to be "bought back" because the company views it as a good investment. If the stock price overvalues a company's equity... the company will be more prone to using its stock to acquire other companies. Stock buyback become less attractive, and it becomes very expensive for the company to be acquired.
Market price per share of common stock?
Market price per share of common stock is a calculated metric used to determine if the price of a stock is a good buy. The market price per share is calculated by taking the net income of a company and subtracting the preferred dividends and number of common shares outstanding.
How is current demand related to the future price of a good?
If the price is expected to drop, current demand will fall.
Relationship between shareholder return and market share price?
Sometimes there is a relationship between shareholder return and the price of a stock. However, it is not real close. People buy a stock on the basis of what they think it will return in the future rather than what it has returned in the past. If a stock keeps slowly increasing its dividend, people generally assume that the company will continue in that direction. Most people would pay a little more for that stock than they would for a preferred stock in the same company that would never increase its dividend. However, if a company decreases its dividend, people take that as a negative sign. A number of people will dump the stock. It can still be a good company but a lot of people will get out. They see a company that is getting into trouble. The stock could fall below what it would be if just the ratio of the last dividend to the price were considered. Some people will buy the stock because they see a stock with a 10% dividend. A number of companies do not pay dividends. Some are startups with special products that a big company might purchase. There is no telling if their product will ever be worth anything. That is strictly a gamble.
Is stock price maximization good or bad for the society?
of course it is bad research about it
How does stock price affect a company?
In the strictest sense of the word, not much. As long as the company does not run out of cash, then its stock price is irrelevant to the company's operations. However, stock price is a reflection of what the market thinks the company's equity is worth, and this has implications. So, here are some scenarios: If the stock price undervalues a company's equity... it will tend to attract buyout offers and hostile takeovers as people take advantage of the stock's low price. Also, investors will be unhappy with the stock performance and the CEO will not collect large bonuses. So CEO turnover is another symptom of a low stock price. And finally, underpriced stock will also tend to be "bought back" because the company views it as a good investment. If the stock price overvalues a company's equity... the company will be more prone to using its stock to acquire other companies. Stock buyback become less attractive, and it becomes very expensive for the company to be acquired.
What is most likely to lead a increase in the price of a company's stock?
A good earnings report
How do I know what is a good price when it comes to buying stock?
You can determine what is a good price when it comes to buying stock by doing a company evaluation. You can read more at http://www.fool.com/investing/beginning/investing-strategies-your-first-stock.aspx
Is it good to have a high closing price or a low closing price?
If you own the stock, it is good to have a high closing price. If you are short the stock or trying to buy the stock, then a low closing price.
What are the major benefits of secondary market to a company?
* If a share value goes up, company can reissue stock at a higher price * Companies love high share price, as this will help them look good to creditors, suppliers and partners. * Remember company's employees are also investors in the company (through stock options, stock purchase plans), hence this benefits companies as well
Is Titan oil and gas a good company?
NO ! I bought this company's stocks for $4000, as it showed significant increase in stock price. The company's stock price has since decreased by more than 30%, and when i tried to sell the stocks to get whatever money I could, it only gave me the option of selling it for 0.01% of its actual stock price. Hard stop and sell on stop doesn`t work either... do not invest in this company !
Market price per share of common stock?
Market price per share of common stock is a calculated metric used to determine if the price of a stock is a good buy. The market price per share is calculated by taking the net income of a company and subtracting the preferred dividends and number of common shares outstanding.
What are the signs of a stock market scam?
The pump-and-dump is a common stock scam where a stock will be promoted and pumped up so many people will buy it and raise the price. Then the original owners will dump their stocks and drop the price again. In other words, if something looks too good to be true, it is.
Does a stock dividend increase total assets?
Typically, the answer is no. Most stocks will drop slightly after the dividend is paid, and this will make your total asset pool worth the same amount after the dividend is paid. That is not to say that it is bad for a company to pay dividends. In fact, dividends tend to make the price of a stock take on some of the characteristics of a bond. Companies that consistently pay out a good dividend can have more stable stock prices as the economy slows and interest rates drop.
What affects the price of stock?
Basically the stock marketis like any other market in the economy. Prices are regulated by demand and supply. Now there are various factors which affect demand and supply which will affect the price. Those factor can be news for example. A good CEO has left the company, or the company has committed fraud. Those things make people loose trust in the company and they will sell the stock which means the price goes down. Still over history it can be calculated which trend the current stock price is going. blog.vantagetrade.com is giving greater insight in how that works.
What is a good tip to make every penny count when buying stocks?
Among the good tips for buying a good stock, one will carefully review some financial news and pick a stock at a lowest price possible with a financially healthy and stable company.
What are the major factors that determine the value of firm's stock?
The price of a firm's stock is determined by the market - what are people willing to pay for it. You might consider things like Net Book Value and Price/Earning ratio; but you also have to consider other business conditions: Has the company just secured a valuable patent or trademark that has not produced any income yet? Are they suceptible to other market trends (good or bad) such as mortgage companies feeling the impact of a declining real estate market. And don't ever confuse a good product with a good company - a poorly managed company will fail regardless of their products. A stock is considered over valued if the combined market price of all the company's shares is above the expected future value of the company, and it is considered undervalued if the combined market price of all the company's shares is below the expected future value of the company.
