Most recent comes to mind is Starbucks and Brian Niccol, with just the news of it.
In: Economics
Never invest in a company with an incompetent CEO is the rule on Wall Street. A competent CEO means profits go up.
Every played sports? Or been on a team at work?
Ever had a shitty coach or a shitty manager? What if you instead had a good coach or a good manager. Do you think your team would do better?
A CEO can be the same. What if you trade out a shitty CEO for a good one. Do you think your company will do better?
Thats pretty much all thats happening. People look at the CEO and think they may do better or worse than the last one.
Just like those guys at ESPN talk will predict a coach will do good or bad. Or your new manager is gonna be great or an asshat.
Then they make bets on it, which changes the stock price.
The CEO makes top level decisions. The company’s future profitability can rise or fall based on whether those decisions are good or not. Stock pricing is based largely on people’s predictions about how profitable the company will be in the future.
Investors want to buy stock for as low a price as they can and sell it for as much as they can. Generally.
If people think a company is going to be more profitable in the future, they want to buy the stock as far ahead of that as possible so they can buy it for as low a price as possible. If they think it is going to lose money and they own some of that stock, they may want to get rid of it quickly so they can sell it at a higher price before it falls. And these both become self fulfilling prophesies. When there’s an increase in people trying to buy a stock, that’s increasing demand when there’s a limited supply, so the price increases. And the opposite happens when people are trying to get rid of it.
Because they’re immensely important….
Why does changing the engine of my Ferrari to a Toyota make it go slower?
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