As most stock exchanges operate a limited number of working hours, generally Monday to Friday during traditional office hours, but many businesses now operate 7 days a week, often 24/7, to what extent might the valuations offered by the market be considered artificial/inaccurate in respect of this? For example, although many retail businesses make a significant amount of their sales at weekends, and presumably are increasing in value as a result, it's not uncommon to find that the change in valuation of a share on a Monday morning (after the two days of weekend sales) is no different than that on the Tuesday morning, for instance.
asked Apr 24, 2017 at 13:19
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2 Answers
Company values (and thus stock prices) rely on a much larger time frame than "a weekend". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the "value" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits.
answered Apr 24, 2017 at 14:12
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1To add to this point - for many tech companies, the company's market valuation [defined by share price * # of shares] is often heavily influenced by future sales for products that haven't even hit the market yet. There was a point in Facebook's life where the valuation implied that each user account was worth something like $1k to Facebook, while there were minimal text-only ads. This meant the market expected that more users would create accounts, and also that eventually more ads would be created. Commented Apr 24, 2017 at 14:23
Stock values are generally reflective of a company's overall potential; and to some extent investor confidence in the prospect of a continued growth of that potential.
Sales over such a short period of time such as a single weekend do not noticeably impact a stock's valuation. A stock's value has more to do with whether or not they meet market expectations for sales over a certain period of time (generally 1 quarter of a year) than it does that they actually had sales (or profits) on any given day.
Of course, catastrophic events, major announcements, or new product releases do sometimes cause significant changes in a stock's value. For this reason you will often see stocks have significant volatility in periods around earnings announcements, merger rumors, or when anything unexpected happens in the world that might benefit or hurt their potential sales and growth.
But overall a normal, average weekend of sales is already built into the price of a stock during normal trading.
