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Inspired by my previous question, if the traders are the main cause for the price change of the stock, does that mean unclear or deceptive company news and updates can affect the stock price in the opposite direction of where the company is actually headed?

  • What do you mean by "actually headed"? The perception of the company's current and future financial health is, as previously discussed, the only thing that determines the stock price. So if there's enough bad news about a company -- even if it's completely wrong -- such that everyone believes the company is going under, no matter what other evidence (like account statements) they see, then the company will "actually head" to zero even if it's perfectly healthy financially. There is no "true price" or "correct price" for a stock -- there is only what other people will pay you for it. – dg99 Feb 13 '15 at 16:43
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Yes, but only in a relatively short term. False news or speculations can definitely change the stock price, sometimes even significantly. However, the stock price will eventually (in the long-term) correct itself and head to the right direction.

  • I'd argue that false and misleading news, if issued by the company, is definitely a signal that something is wrong at the company and will end up being priced in! – serakfalcon Feb 13 '15 at 0:34

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