Once upon a time, I thought I saw some important news that should have affected a company’s stock price, as it would have led to significantly decreased demand for one of the company’s flagship products.
I looked at the stock price, and after the trade show in which the announcement was made, the value of the stock had, to my great surprise, actually increased.
That company was Sony. The announcement was that Final Fantasy XIII would no longer be a Playstation 3 exclusive; its English version would also be released for the Xbox 360. As a game player, I knew that Final Fantasy was a game series that was popular enough to drive sales of whatever console it was available for, regardless of its other merits. However, this announcement meant that many people who might have bought a Playstation 3 would no longer do so. As the original Playstation and the Playstation 2 were one of Sony’s largest revenue sources, further bad news regarding the the Playstation 3′s future should have negatively affected its stock price. Why didn’t it?
I came up with three guesses:
1) Average stock traders don’t know as much as I do about the video game market. This is possible, but “Hey, Sony just lost its exclusive Killer App!” should be something that anyone actually paying attention should notice—stock traders aren’t that stupid, are they?
2) Sony is a huge conglomerate. It sells so many other products that bad news in one area either just didn’t matter (nobody expected the Playstation 3 to sell as many units as its earlier versions, for the simple reason that it was much more expensive) or it was outweighed by good news about other markets, such as digital cameras.
3) There is some other explanation, which I have not yet thought of.
Once upon a time, I thought I saw some important news that should have affected a company’s stock price, as it would have led to significantly decreased demand for one of the company’s flagship products.
I looked at the stock price, and after the trade show in which the announcement was made, the value of the stock had, to my great surprise, actually increased.
That company was Sony. The announcement was that Final Fantasy XIII would no longer be a Playstation 3 exclusive; its English version would also be released for the Xbox 360. As a game player, I knew that Final Fantasy was a game series that was popular enough to drive sales of whatever console it was available for, regardless of its other merits. However, this announcement meant that many people who might have bought a Playstation 3 would no longer do so. As the original Playstation and the Playstation 2 were one of Sony’s largest revenue sources, further bad news regarding the the Playstation 3′s future should have negatively affected its stock price. Why didn’t it?
I came up with three guesses:
1) Average stock traders don’t know as much as I do about the video game market. This is possible, but “Hey, Sony just lost its exclusive Killer App!” should be something that anyone actually paying attention should notice—stock traders aren’t that stupid, are they? 2) Sony is a huge conglomerate. It sells so many other products that bad news in one area either just didn’t matter (nobody expected the Playstation 3 to sell as many units as its earlier versions, for the simple reason that it was much more expensive) or it was outweighed by good news about other markets, such as digital cameras. 3) There is some other explanation, which I have not yet thought of.