Hi Redditors,
I am currently a freshman and looking to take some finance classes next semester. I'm interested in the stock market but I have some questions that I would love to hear some explanations.
1) When the company IPO, the company already sold its shares to the public. So why would it care whether or not the stock price falls or rises? The Company doesn't benefit from the gain in the stock price and the business is still going even if the stock price plummets.
2) When the company is not doing well, people will be selling its stocks or shorting, which causes the price to fall. However, it doesn't affect the day-to-day operations? So how can companies go bankrupt from stock price keeps plummeting and eventually zero?
3) Some companies post good earnings but then the stock price decreases the following day even it beats its estimates and higher guidance than the street expects. Why does that happen? For example: NVDA this quarter.
4) How do activist investors work? Normally they own maybe less than 10% (mostly around 5%), but how can they have such influence on the business?
Thank you in advance.
Submitted February 11, 2017 at 03:57AM by gogohuskies http://ift.tt/2lur260
