Anorak | Apple’s sales rise, profits rise, shares tank: WTF?

Apple’s sales rise, profits rise, shares tank: WTF?

by | 29th, January 2013

A USEFUL little reminder of something that economists keep trying to tell people but which often doesn’t seem to get through. Stock markets are forward looking.

So, we have Apple reporting its financial results for the most recent quarter. Profits were up (only very slightly, but they were). Sales were well up. Everything’s looking pretty rosy in hte Cupertino garden. At which point the shares drop 10% in minutes.

What the hell is going on here?

The answer is that stock markets are forward looking. The technical description of the current share price is the current value of all the money the company will ever make off into the infinite future. Or if you want to get really picky, what all the buyers and sellers averaged out think that current value should be.

Which means that share

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Posted: 29th, January 2013 | In: Money, Technology Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink