Media Strategy: Stock Analysis through the Press
There are fundamentals, technical analyses, charts, graphs, and endless numbers, figures and statistics. But the fact is, stock prices don't always react the way they should according to all of these things. The press, and how the company handles the press, has a big impact on share price, at least in the short-term.
In addition to all the charts and graphs, before making a decision to buy a stock, it's a good idea to review what has been said about the company in the press. Search through newspaper articles on the Internet, press releases, blogs, market letters and anything else that may say something about your prospective purchase. Most companies will include on their web sites a set of links to articles about them (at least the positive ones). Companies will also typically maintain all press releases they have issued on the site as well.
A company that has a good internal press office will more often be a better bet than one which does not, simply because they tend to be proactive to bad press, and they take steps to keep their name in front of the public. They issue press releases periodically to keep investors informed about new programs. Take a look at the company's web site, and look for a link that says "press", "press room," or "media". This is where all of those links will be held. If the company puts out a press release only once or twice a year, they probably do not have an active public relations department, and they are not well equipped to promote their image. Image is just as important as fundamentals when investing in a stock, especially for day trading or intra-day trading.
Very often, share prices rise and fall based simply on media reports, and even rumors. Say for example, a magazine publishes a positive review of a new product. Share price may rise upon publication of the periodical. A good company will make good use of that positive review as well, perhaps issuing a press release about it, mentioning the fact in the quarterly report, or gaining permission to reprint the review in its promotional literature.
At the same time, if a prominent magazine publishes a bad review of the same product, share price may drop. The company's public relations office must then go into high gear, perhaps issuing a statement regarding inaccuracies, or encouraging other publications that may be more friendly to review the same product. The firm may hire a high-tech think tank or research firm to conduct an impartial review designed to counter the publication's review, and then publish the results.
All other things being equal, the company with an active media department or public relations department, or one which has spent money to engage a professional outside public relations firm, may be a better buy, at least in the short-term.
Information is for educational and informational purposes only and is not be interpreted as financial or legal advice. This does not represent a recommendation to buy, sell, or hold any security. Please consult your financial advisor.