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It turns out saying "we failed and are canceling a product, again" hurts the stock price more.
by GavinMcG 10y ago
It turns out saying "we failed and are canceling a product, again" hurts the stock price more.
- fowlerpower 10y agoSure I follow that but I think that the stock will take the hit no matter what. In the very least be honest with us.
- TaylorAlexander 10y agoWhich, said another way, is lying for profit.
- matt4077 10y agoWhich, in yet another way, would be called "fraud". But may (s)he throw the first press release who does has never couched bad news in sweet sweet quantum leaps of paradigm-shifting.
- s8-0913458 10y agoNo, that's not how the stock market works. If a company's project/product were failing and/or losing money, then investors would have priced the loss into the stock price long ago. If a company announces that it is ending a money-losing effort, then investors will value the company more highly. In theory, therefore, this announcement should raise the stock price. In practice, who knows.
- chii 10y ago> investors would have priced the loss into the stock price long ago That's a misconception. The investors had done expectations. They were either met or unmet. But unless there is insider info, a project going bad won't get priced before the news is known. Stuck prices isn't some magical thing that knows all. It's simply an average of what everyone believes. Beliefs are sometimes wrong.
- asafira 10y agoThinking about your last statement: If the price were an average of beliefs, we would have people that believe it's worth more and people that think it's worth less. Those that think it is worth more would, logically, buy Google stock, and then the price would increase until we reached the price where people are somewhat on agreement that it isn't worth more. So, either there is a lack of funds to make the purchases, or the given price reflects the highest price someone is willing to pay for it, right?
- pjc50 10y ago> the given price reflects the highest price someone is willing to pay for it, right? Sure. But how far can you infer backwards from that?
- lmm 10y agoThe people who think it's worth more buy. The people who think it's worth less sell. They meet in the middle. I suppose there is a bias in the fact that not all long positions have corresponding shorts, but that seems like it would be pretty minor.
- matt4077 10y agoIt also depends on "the lowest price someone is willing to sell at", and you can start sketching it graphically, and have to ignore "some people don't have the money to buy" and "this only applies to people actually trading stocks", but at the end it really has no impact on OP's point, namely that stock price is a reflection of a collective opinion, subject to the full range of flaws tainting all human perception.
- jameshart 10y agoEvery stock trade reflects a disagreement between two parties about the value of the company, not an agreement on what it is worth. The buyer would rather own that stock than that amount of money. The seller would rather have the money. They can't both be right about which is more valuable.
- 10y ago
- slyfocks 10y ago> If a company's project/product were failing and/or losing money, then investors would have priced the loss into the stock price long ago. Not necessarily--often, money-losing operations are valued by investors because of their potential to be profitable in the future. Also, the market is likely more efficient with large companies like Google, Apple et al., but short-term price movements still aren't always rational.
- duaneb 10y agoFailing/losing money in what time frame? That makes all the difference. If the time frame is "now", you might be right, but investors typically want some type of return....
- dredmorbius 10y agoCraig's job-shopping. I suspect he's more concerned about his personal stock price than Alphabet's.