Why do some stocks fall despite companies showing good profits?

Question

can somebody explain this!

thx

Answer 1

There are many reasons.

Perhaps a company had good earnings this quarter, but lowered their forecast for the rest of the year's earnings.

Answer 2

Perception.........

Answer 3

There is a saying among traders: "buy on rumor, sell on news".

If you will look at the chart of your stock from a few weeks back, you may notice that its price has been going up (or down) in anticipation for the company's earnings release.

Typically, a stock's price may go up when the market is expecting higher earnings for the company. Consequently, if the market is expecting lower earnings data for the company, its stock price will go down prior to earnings release.

When the news comes out, traders will take their profits, and may even open a position the other way, knowing that "investors" are coming into the market to buy the stock for their long term portfolio.

Hope this helps.

- Jim http://jsforex.blogspot.com

Answer 4

There is only one factor that drives the price of the stock, and that is buyers.

You can have the greatest company in the world, with the greatest products/services and if no one wants it, the price of that stock will go no where, and if anything will drop

Many companies report good earnings, and if they don't meet analysts projections, the stock sells off,

When you have a company that everyone wants to buy into, the price of the stock will rise whether the company is making money or not.

I ran a firm with Market Makers, they would follow the public's hype as much as they would follow the technicals.

Buyers make the market.