Prices often rise when earnings exceed expectations and fall when expectations are not reached. And if they meet expectations, often nothing happens to the stock price. There s also an unwritten rule which all public companies are expected to follow regarding earnings announcements. Companies that fail to pre-announce and thereby create negative earnings surprises are often penalized with more severe stock price declines. These recommendations can have an influential effect on short-term prices.
Prices can fall on downgrades and reductions in earnings expectations.
The purchase of one company by another is usually announced with fanfare, often after lots of early hints about the prospect of an acquisition. In general, the company being acquired will experience a stock price increase while the stock of the company making the acquisition decreases. While a good acquisition can therefore improve the overall quality and future earnings potential of company, in the short term its stock can actually fall in value as a result. Two types of reorganization are common. There is often no guarantee the company will actually buy its stock back.