A hypothetical share question.
Discussion
Can a share knower-abouter solve a hypothetical argument we are having:
A large PLC closes an arm of its company,which amounts to about 5% of its turnover, due to the fact that it is no longer viable in the current climate.
THe two sides of the argument are as follows:
a)This makes the share price go up because current price already accounts for hard times- and they are seen to be taking further action to cut costs and prevent risk
b)THis makes share price go down because past of the business are failing?
Edit: No idea why this is showing as a certificate 18 post??
A large PLC closes an arm of its company,which amounts to about 5% of its turnover, due to the fact that it is no longer viable in the current climate.
THe two sides of the argument are as follows:
a)This makes the share price go up because current price already accounts for hard times- and they are seen to be taking further action to cut costs and prevent risk
b)THis makes share price go down because past of the business are failing?
Edit: No idea why this is showing as a certificate 18 post??
Edited by blindswelledrat on Thursday 27th November 11:38
Both can be right.
What is priced in to the shares is obviously important. You could have two similar companies taking similar actions and leading to a rise in one share price and a drop in the other.
Also it depends on the markets position in the shares, if they are long, they are long and in the absence of new buyers, the shares will go down pretty much regardless of what happens.
What is priced in to the shares is obviously important. You could have two similar companies taking similar actions and leading to a rise in one share price and a drop in the other.
Also it depends on the markets position in the shares, if they are long, they are long and in the absence of new buyers, the shares will go down pretty much regardless of what happens.
Chances are that any action of this sort would already be factored into the price as it's likely that the market would be expecting this to happen. Very little happens that the market hasn't already factored in. You generally see the large movments when something wholly unexpected is announced (i.e. profits warning).
All other things being equal though I would have thought this would be seen as a positive move by the management and would probably give a small upwards movement. Far too many other factors to be taken into account though in this simplistic argument (cash balances, health of the other businesses, market sector performance and so on).
All other things being equal though I would have thought this would be seen as a positive move by the management and would probably give a small upwards movement. Far too many other factors to be taken into account though in this simplistic argument (cash balances, health of the other businesses, market sector performance and so on).
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff