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Sanders tweet causes drug company to lose $400M in a day
- maxerickson 10y agoThe valuation of the stock of the company declined by $400 million, which was 15%. In business parlance, the company didn't lose any money. This article does better with the jargon, names the drug, discusses the amount of the price increase and includes a chart of the stock for the day: http://www.businessinsider.com/ariad-pharmaceuticals-stock-dropping-after-bernie-sanders-tweet-2016-10 http://www.businessinsider.com/ariad-pharmaceuticals-stock-d...
- brianwawok 10y agoRight, which means savvy investors will buy at the dip and make 400 million over the next week. You need laws to stop this stuff, not tweets that lower stock value for a week.
- throwanem 10y agoUh, how come? This hardly qualifies as trading on insider information, after all.
- deleted 10y ago[deleted]
- maxerickson 10y agoI believe they mean that there is an opportunity to improve the regulatory system surrounding prescription drugs in the US, that a Senator tweeting doesn't represent much of anything compared to legislation.
- brianwawok 10y agoExactly. A tweet has no lasting impact on the stock price. The stock price will adjust to some multiple of yearly profit, adjusted for the overall climate, adjusted for the industry, adjusted for the growth rate.
- goodcanadian 10y agoThe company didn't lose $400M; the aggregate market value of the stock fell by $400M (or more usefully, 15%) . . . and I am not even sure I understand why. The tweet, if accurate, should certainly make people mad at the company, but it doesn't necessarily have any effect on profitability. Selling the stock seems an odd way to punish the company.
- callesgg 10y agoStock value on the stock market has very little do with a company's profitability. It has to do with what stock owners think that other stock owners will do with their stock.
- kauffj 10y agoThe government has shown a tendency to selectively pursue pharmaceutical companies when there is public outrage, most recently with Shkreli and Mylan. Selling the stock isn't done to punish the company, it's a reaction to the fear this will happen to Ariad as well.
- goodcanadian 10y agoThe thought had occurred to me, and perhaps, you are right. However, 15% is a pretty large speculative jump based on one little tweet. I admit that I do tend to take a longer view of these things than the typical trader (and frankly, I would never have owned this stock in the first place).