Is there logic to stock predictions?

[tsm]

Saw this today:

“Plug Power shares jumped 2.4% ahead of the bell. The hydrogen and fuel cell company’s shares got an “outperform” rating from RBC Capital, which also gave it a price target of $2 a share—it closed Tuesday at $34.08.”

So a financial firm is predicting positive results for a stock and a price target that’s 1/17th what the current price is. Can someone please explain how that makes any sense at all?

 

[rooster]

Can someone please explain how that makes any sense at all?

It doesn’t.

the ELI5 version is stock price and price targets are what someone is willing to pay.

long version gets way more complicated, stocks tend to drop after some upgrades and rise after downgrades. So are Market makers trying to create volume to buy or sell into?

who decided that Tesla was only worth 200 a share when it was trading at 800? Did that person hold a short position that was costing them money bc the stock kept going up? Were they trying to create headlines to keep Tesla stock in the limelight and drive the fomo WSB screw the shorts crowd to buy more and drive the price higher.

the market is all a game of manipulation. Manipulating the books so the earnings look better or worse than they are and manipulating people to buy into your company and make it more valuable and thus you (as c suite exec) get paid more bc your stock compensation is worth more.

 

[Route 45]

 

[AtTheMurph]

Saw this today:

“Plug Power shares jumped 2.4% ahead of the bell. The hydrogen and fuel cell company’s shares got an “outperform” rating from RBC Capital, which also gave it a price target of $2 a share—it closed Tuesday at $34.08.”

So a financial firm is predicting positive results for a stock and a price target that’s 1/17th what the current price is. Can someone please explain how that makes any sense at all?

you are misreading the RBC price target.

RBC has them at buy with target of $42.

 

[Ingomike]

Is there logic to stock predictions?​

Yes, there is, follow the money. You got it, they want it...

 

[Indianapail]

Most stock predictions (or price targets) are based on a number of different valuation models, which use either discounted dividends, discounted cash flow, or a comparable asset to price. It is important to not that depending on which model is used the price will fluctuate slightly and there is no hard/fast correct answer. For example you could have a company with historically high dividends decide to retain the majority of it's earnings, in this case a 2 stage DDM model would spit out a number quite likely far under what the current price of the stock is (since it's affected heavily by dividend volume and estimated dividend volume). But that same stock could be valued at higher than market price with a DCF model due to increased cash flow to the company in a non dividend year.
Sorry if that was too technical just trying to give perspective on ways these companies are getting valued on wall street.

TLDR depending on which model is used can heavily alter a companies estimated valuation

 

[hoosierdoc]

There actually is a way to predict somewhat based on support and resistance levels. Nothing is fool proof

 

[HoughMade]

Most traders have a logic...but that doesn't mean there is a universal truth that predicts outcomes infallibly.

 

[Tombs]

When someone tells you they can predict what the markets will do, ask to see their holdings and gains over the years.

If they're sitting on less than a trillion dollars, laugh at them and move on.

The only way you're making predictions is with insider trading, or a perfect storm of a product coming to market that is inevitably going to dominate quickly and reflect that in its market value. I think the last no-brainer for decent gains was AMD with their launch of Ryzen and Epyc, kind of a perfect storm if you had the faintest idea of technology. Told a lot of family and friends to get in on it back when it was first launching but nobody listened.

 

[Ingomike]

I am reminded of a story I heard about a very wealthy guy in an area like Fort Wayne size community that was approached by every new investment guy in town to invest money with them. He told them all the same thing, show me your personal tax returns showing what you are doing investing your money and I will give you some money to manage. No one ever took him up on the offer.

Then there is the story from The Millionaire Next Door book that did a focus group with a group of investment counselors, they found not a millionaire among them.

Much of the, so called investment advice is click bait...

 

[Expat]

I like those ads, see what so and so who predicted the 08 collapse is saying now...

 

[AtTheMurph]

I am reminded of a story I heard about a very wealthy guy in an area like Fort Wayne size community that was approached by every new investment guy in town to invest money with them. He told them all the same thing, show me your personal tax returns showing what you are doing investing your money and I will give you some money to manage. No one ever took him up on the offer.

Then there is the story from The Millionaire Next Door book that did a focus group with a group of investment counselors, they found not a millionaire among them.

Much of the, so called investment advice is click bait...

A millionaire financial advisor isn't going to be bothered being in a focus group. Trust me.

 

[Ingomike]

A millionaire financial advisor isn't going to be bothered being in a focus group. Trust me.

The point in the book was that the millionaire next door bought a used car and wanted beer, the mot millionaire financial counselors had new and devoured their expensive wines...

 

[AtTheMurph]

The point in the book was that the millionaire next door bought a used car and wanted beer, the mot millionaire financial counselors had new and devoured their expensive wines...

I don't disagree and they couldn't be bothered with a focus group.

My customers are financial advisors. I know hundreds if not thousands of them. Not many people want a financial advisors who drives an old car and drinks Natty Light as their drink of choice. They also don't want to go a a dumpy office with beat up furniture and worn out carpet, even if all those things are what the client has.

Sort of the same reason your bank is made out of marble and glass and not plywood and linoleum.

In the end advisors are sales people. And sales people like to spend money, lots of money. Big cash flows in and big cash flows out.

 

[BugI02]

View attachment 146296

In any transaction where you can't identify the patsy, it almost certainly means that it's you

 

[Route 45]

In any transaction where you can't identify the patsy, it almost certainly means that it's you

Who is Patsy, and is she up 450% despite the ****ery?

 

[MCgrease08]

Want to know the secret to making a million dollars trading stocks?




























Start with two million dollars.

 

[kickbacked]

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."- Warren Buffett