Most recent comes to mind is Starbucks and Brian Niccol, with just the news of it.
In: Economics
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.
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