Tesla promised self driving taxis and autonomous robots and cheaper new undisclosed products due to release soon, and investors bought it like they always do.
The stock market is a measure of what investors think the company will be worth over the next 10 years or so, essentially. Because if someone came along and wanted to buy the company, they’d typically pay around that amount. So take that amount (what the company is valued at) and divide by number of shares, there’s your share price. Like anything, it’s worth what someone will pay for it.
This is continuously adjusted as investor sentiment changes about where the company (and the economy at large) is going and what that “10 year valuation” is. A single quarterly result certainly could change that number if there’s a big surprise in there, but for the most part companies are good at predicting their revenue and expenses and that is priced into the stock already.
For Tesla, there was a wide expectation that they weren’t going to have a great quarter, it was pretty much known. So the stock was already significantly down before the earnings call. What was not expected was that Musk dedicated the company to building a cheaper car in the coming years. Investors thought this was a good move, stock goes up.
Now look at Meta, it was widely expected they’d have good results this quarter, so stock price is already up recently. What changed in this report is their expenses are much higher than what they previously estimated. So the stock goes down.
The actual quarterly results are a factor in the price but generally those are priced in already, unless you get some big surprise. What’s more important is the investor sentiment about whether the company is going in the right direction, which can change on a whim and for no reason at all.
It isn't that hard to figure out that one has been extraordinarily bullish and priced to perfection and one has been extraordinarily bearish as if they are going out of business.
There you go, spouting facts. Serves you right for being downvoted!
But really, this is exactly it folks. META has gone up like crazy over the past year. Do you think it will continue doing so ad infinitum?
