Anthony Desidero
In the summer of 2015, tens of thousands of gamers flocked to an airtight dome in the middle of LA for an annual conference called E3. It was the hottest gaming event of the year, with multiple announcements and reveals from major game companies. But one unveiling had an unintended by-product. As Square Enix finished off their press conference, they announced one final project; a remake of the critically acclaimed game “Final Fantasy VII.” Almost instantly after this announcement, this happened:
That is a raise of nearly 3% in under an hour. Now there isn’t really an average stat for measuring market return value because the stock market fluctuates so much, but in order for a company’s stocks to suddenly surge to their highest levels since 2008, something major had to have happened. The same goes for any other market or company. In irder to hit umkbers like this, something good (or bad) had to have happened. This leads to to the point of this discussion: Stock market fluctuations depend solely on the supply/demand curve of that company, and the amount of bad/good PR it has.
Take, for instance BP. Their overall stock shares were fine through the 2010 year, until an oversight of basic safety procedures allowed the Gulf Oil Spill in April of that year, resulting in the largest oil spill recorded in history. Over the course of 60 days, BP’s stocks dropped 48%.
Both supply and PR are the cause of this here. The terrible press of being associated with the worst oil spill ever, having to clean up the damage, and the natural ramifications would deter investors quickly. Along with this, the supply of oil dropped significantly, and consumers are more likely to get their oil from different places, due to the PR the company received. This caused a massive withdrawal of stocks, as the stockbrokers (or rather, robots that manage and trade stocks for other humans) quickly sold what they could for as much profit as possible. But does any of this matter? Do companies really care about how much or little their stocks go for? Do they even affect the company at all?
Well...Yes and no. If I buy a share of BP for $60 and sell it for $20, then I’ve lost $40, not the company. Stock selling and management is a whole nother field in itself. But at the same time, a company that lives on its public identity will die by it. The Lehman banks went from riches to rags due to their stocks crashing completely during the 2008 calamity. It all depends on how much a company lives by its self image, and by how much stockbrokers and consumers pay attention to them.
At the end of the day, the stock market is a crazy, volatile slot machine in disguise as something professional. You sit down at the table, and there are countless bets you can place. Which one is the right one? The only way to tell is by doing the hardest thing of all: Waiting.
Works Cited
“BP Shares Recover after Reassurance.” CNNMoney, Cable News Network, money.cnn.com/2010/06/10/news/companies/BP_stock/index.htm.
Burke, Jackson. “Final Fantasy VII Remake Boosts Square Enix Stock.” CNBC, CNBC, 17 June 2015, www.cnbc.com/2015/06/17/sy-vii-remake-boosts-square-enix-stock-to-highest-level-2008.html.
Palmer, Brian. “Does It Matter to a Company If Its Stocks Lose Value?” Slate Magazine, Slate, 9 Aug. 2011, slate.com/news-and-politics/2011/08/does-it-matter-to-a-company-if-its-stocks-lose-value.html.
I completely agree with this. Yes, stocks fluctuate all the time (like ALL the time), but if there's ever a notable rise or drop in a company's stock value, something must have had to happen in order to cause that rise. For example, if you look at the stock value of fellow game company Nintendo, their stock had been in pretty rough shape since about 2013. But with the reveal of their newest console, the Nintendo Switch, in late 2016 (plus the console being subsequently released the following March), their stocks rose to the highest they've been since 2007, the company's best financial year before the Switch. Real-world events are 100% a big reason stocks have large rises and drops.
ReplyDeleteWell I’m not quite sure what your main point/argumentative statement is. You first talk about how the supply/demand and press release are the factors of a companies increase or decrease. But then towards the end you start going on a small little rant of sorts about how the stock market works, maybe try to wrap it up by bringing the thesis and conclusion together. On that point though I do agree that press release and supply/demand affect the stocks in some way, but supply/demand are not the key factors when a company's stock raises quickly. With some companies it’s true like video game companies but that is because they are an entertainment business they make things to entertain the people so of course when a new highly rated game is to come out their stocks go up. This doesn't apply to everyone though, if a gas station announced they were going to put 10 flavor slushie machines in every store they have would the stock go up? Probably not even though everyone loves slushies and they would be making a good amount of money with offering 10 flavors. The true key factor is simply just press release. It’s because of the press the stock brokers know which company to invest in and which company you shouldn’t invest in.
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You had great examples for showing the stock market going up and down with the events that happen around the world. But while reading I noticed that you miss spelled two words but it was maybe from typing to fast and you didn't look back (In irder to hit umkbers like this,). Besides that I loved how you used E3 Final Fantasy VII from a gamer stand point and how it went up just by them showing it. Also with BP and it's market went down a lot after the oil spill.
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