At a high level, we can consider the current buy demand to be weak based on the new information. If bad news just came out, would you immediately want to buy?

At a high level, we can consider the current buy demand to be weak based on the new information. If bad news just came out, would you immediately want to buy? No, you'd probably wait. That overall pressure results in a downward movement in price. Further, there is pressure for current holders to sell because they know there is going to be downward pressure. They can sell without much concern. Even if they really want to maintain their position, they can sell short term and buy back in later at a lower price. The more significant the news, the more obvious the pressure will be and at a higher expected intensity - so more people will behave as described above.