Stock prices

Full Answer Section However, short-term performance can also have an impact on stock prices. For example, if a company reports negative earnings or misses analyst expectations, its stock price is likely to decline. This is because investors are concerned about the company's ability to generate profits in the future. In general, long-term performance is more important than short-term performance for stock prices. However, short-term performance can also have an impact, especially if it is negative. Here is an example of how long-term performance can affect stock prices:

• Apple has consistently generated positive earnings growth over the past 10 years. As a result, its stock price has increased by over 1,000% in that time period.

Here is an example of how short-term performance can affect stock prices:

• Tesla's stock price declined by over 30% in 2019 after the company reported negative earnings for the first time in its history.

Overall, it is important to consider both long-term and short-term performance when making investment decisions. However, long-term performance is generally considered to be more important.

Sample Answer Stock prices are affected by both long-term and short-term performance. However, long-term performance is generally considered to be more important than short-term performance. This is because long-term performance is a better indicator of a company's underlying fundamentals. For example, a company that has consistently generated positive earnings growth over the past five years is more likely to have a higher stock price than a company that has only recently started to show profits. This is because investors are more confident in the long-term prospects of the first company.