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Factors Lowering Stock Prices

Factors Lowering Stock Prices

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Published by ClassOf1.com
There are many factors that influences the fall of stock prices in the market. Some of the important factors that hold a heavy influence on the stock prices are discussed in this article.
There are many factors that influences the fall of stock prices in the market. Some of the important factors that hold a heavy influence on the stock prices are discussed in this article.

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Categories:Types, Business/Law
Published by: ClassOf1.com on Sep 04, 2013
Copyright:Attribution Non-commercial

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09/04/2013

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Finance
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Subject: Finance
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The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
 
Factors Lowering Stock Prices
The news releases of the earnings and profits of the company and also the future estimated earningcan affect the share price of the company in a big way. Also if the company fails to announce thedividends on a particular quarter, it may affect the stock price of the company for a temporary period. If the company is into manufacturing products of any specific kind and if by accident, it hasto recall the product from the market, it may result in lowering of the stock price of the company. If the company has been having bad performance in the market and otherwise and is unable to getnew business, because of which it has go through layoffs, this would give a perception to the sharemarket that the company is unstable and hence the stock price of the company may fall as a result.The stock price of the company may also fall, if the news spreads in the market that the company isgoing through some sort of hostile takeover which will affect its brand. The stock price may also fallif some employee or the management of the company is caught in some sort of financial frauds,defaults or scandals. The stock price also depends on the kind of performance that has been given by the company in regards to other companies in the industry and whether or not it is showingpositive levels of growth as well. So any bad performance in any particular quarter where in thecompany is not able to meet its expectations, they will face the consequences of their stock valuedepreciating. The various different types of economic factors also play an important role in causethe depreciation in the stock value of the company. For example if the company has borrowed somemoney, the higher interest rates would affect the share market value of the company. Also themacroscopic economic outlook also makes a difference to the entire scenario, if the future scenariois bleak the investors would prefer to either hold their shares or sell it instead of buying new sharesof the company.This would reduce the overall value of the shares in the market. If the inflation in the economy ishigh, this would result in reduced spending on behalf of the customers and hence reduced profitsfor the companies. As a result the banks will then resort to increasing the interest rates to bringdown the inflation, which will result in reduced profits for the firm and hence the reduced market value as well. The market sentiments are also affected by the political situation of the country. So if 
 
Subject: Finance
*
The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
 
the company is seen to favor a particular political party in the elections and if that party loses theelections, then in that case the market would react negatively to such a result and down grade theshare price of the company as a result.

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