Question

In: Finance

What makes some stock goes up and down so often? (Example LFIN)

What makes some stock goes up and down so often? (Example LFIN)

Solutions

Expert Solution

It is all because of supply and demand.

With LFIN, there was anews saying the company filings and press releases were filled with fraud and inaccuracies and company and CEO charged with selling unregsitered securities. And everyitme some or the other information comes out which claims fraud by the company. Also, this seems to be an operator driven stock whereby different individuals/ investment institutions conspire & work together to inflate/deflate value of a stock.

If supply is more and demand is less, prices go down.

If supply is less and demand is more, prices go up.

Demand is more when a company's results is better than expected and therefore price jumps up. Simialrly, if results disappoint i.e., are worse than expected, the price will fall.

The level of a stock's price ratios is determined based on which scenario investors anticipate will come. So, prices fluctuate according to the investors' expectations about the financial results or prospects of the company.


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