Plain-English answers to the questions people actually ask about the stock market — what “priced in” means, why a stock falls on good earnings, and more.
“Priced in” means the market already knows. A plain-English explanation of why a stock can fall on good news, and why the surprise matters more than the number.
A company beat estimates and the stock dropped. The common reasons — expectations, guidance, and the difference between a result and a surprise.
A PDUFA date is the deadline the FDA sets for deciding on a drug application. What it is, what Priority Review means, and what it does and doesn't guarantee.
A stock offering means a company is selling new shares to raise money. Why it usually dilutes existing holders — and the case where it does the opposite.
In a stock merger you are paid in the buyer's shares, not cash. What an exchange ratio is, and why the target's price then tracks the acquirer.
Most of a typical day's move in a single stock is the market moving. How to separate what happened to a company from what happened to everything.
A stock split divides existing shares into more, smaller pieces. Why it changes nothing about what a company is worth, and what a reverse split signals.
Short sellers borrow shares and sell them, hoping to buy back lower. What short interest measures, and why a rising price can force them to buy.
A buyback is a company purchasing its own shares. Why it is the opposite of an offering, what it does to earnings per share, and what an authorisation means.
Guidance is a company's own forecast for its coming quarters. Why it often moves a share price more than the results that were just reported.
Trading continues before the open and after the close, in thinner conditions. Why after-hours prices move so sharply and why they can look different by morning.
Upgrades, downgrades and price targets explained — what an analyst rating actually is, the timeframe it assumes, and why the change matters more than the level.
Exchanges pause trading for news, for volatility, or for regulatory reasons. What each kind of halt means and what usually happens when trading resumes.
The price-to-earnings ratio compares what a company costs to what it earns. How to read it, why a low one is not automatically cheap, and what it omits.
A stock usually falls by roughly the dividend on its ex-dividend date. Why that is arithmetic rather than bad news, and what the four dividend dates mean.
Volume is how many shares changed hands. Why a big move on light volume means something different from the same move on heavy volume.
An 8-K is the SEC filing a company makes when something significant happens between quarterly reports. What triggers one and why the filing beats the wire.
A gap is the jump between yesterday's close and today's open. Why it happens overnight, and why most of the move is already finished by the bell.
The highest and lowest price over the past year. Why the range is a rolling window that moves on its own, and what the level does and does not tell you.
The gap between the highest price a buyer will pay and the lowest a seller will accept. Why it is a real cost, and why it widens exactly when it hurts.
The float is the portion of shares actually available to trade. Why it differs from shares outstanding, and why a small float makes a stock move more.
No — share price alone says nothing about whether a stock is cheap. What market capitalisation is, and why the price per share is an arbitrary number.
One question, no account: what did you come here for, and did you find it? A person reads these, and they shape what gets written next.
From StockMotive — the honest why behind every market move. Educational information only, not investment advice.