Question

Apple was just ordered to pay $234 million in a patent lawsuit. What do you think is going to happen to the stock price of Apple? Explain.

Answer 1

In the short-run, stock prices can be volatile on the basis of recent developments, positive or negative news about of a company, and expectations of the general public. Negative news which can hurt the finances or the image of the company generally result in a decline in the stock price as some investors want to exit from their investments in the company. So heavy selling happens and the stock price goes down. The $234 million lawsuit hurts the company both financially and reputation wise. So some investors might want to exit their investment and the stock price is expected to go down.