Share Prices Increase when Companies Post Losses!
Share Prices Increase when Companies Post Losses!
Usually you’d think that if a company announces annual losses of £141m (in ITVs Case) or £Billions in the case of Lloyds TSB Banking then Shares would go down?
- You’d think that shareholders know that the value of the company is less as it’s making a large loss and so that share holders would sell shares, therefore flooding the market place and bringing the share price down (lower). – Basics Demand & Supply.
But, what you find is that because of the credit crunch, shareholders and investors already assume the companies are buggered and that a loss inevitable and that’s why we’re seeing low share prices nowadays. So when these companies posts losses, they are usually better (less) than what investors think it’s going to be. So more people want to buy shares in the company, demand increases for shares and the share value (price) increases!
Crazy but True…
