Share Prices

[zipadeedodah]

I really need some help - why might share prices initially drop after an announcement of increased profits? And then quite sharply rise?

Thank you!!

[pad444]

I asked the same question only the other week at work, and was told that when results are announced, no matter how good they are, the financial sector always expects better. The shares then fall, and inevitably rise again. It happened to HBOS the other week, and my director gave me this reply when I asked the question. I am not sure I fully comprehend it, but it does seem to apply. I will be watching this space for further replies!

[pab]

Hi, an interesting question, in the same vein why sometimes does the price drop when the buys outnumber the sells by big margins, and also the reverse situation.I would have thought that heavy buying would reduce the amount of available shares so driving up the price.If only logic was logical.

Pab.

[Trotbot]

It i sas pad444 says. The markets (particularly in the USA) have an enormous number of 'experts' who predict what will happen, based on teams of researchers and industry knowledge. They go into some quite staggering detail (I have seen research that predicts the manufacturer and sales of cars in every industrialised country in the world over the next 10 years, and the predicted financials).

These experts then tell their clients the news, and release it publically later. The share price usually reacts to that public news, so the initial investors are the first to benefit (sell if low profits, buy if high to put it simplistically and ignoring other potential trades).

Therefore if experts predict a 20% rise in net profits, or a 14% rise in revenue, or pretty much any other indicator (investment decisions etc) and it is lower, the market will correct the original over confidence.

Some companies refuse to play, and don't give out info to experts, some are absolutely beholden to them. The better the track record of the expert, the more investors trust them and the more likely a big drop in share price if the expert over estimates profits.

Stick your money in the Building Society.

[StockPicks]

The ask cost is the cost at which a business sector creator or dealer offers to offer a security or item. The value another business sector producer or merchant will pay for that security is known as the offer cost, and the distinction between the two is known as the spread.

No doubt, you could purchase one for $100, you'd make one fortunate handle an exceptionally upbeat man. Yet, it'd be inept and future exchanges wouldn't be founded on your ineptitude.

You'd basically recently swell the spread to implausible levels.

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