What does it mean when someone says that a stock went up X points? Does this refer to a percentage or numerical value?

By Investopedia Staff AAA
A:

For stocks, one point equals one dollar. So when you hear that a stock has lost or gained X number of "points", this is the same as saying that the stock has lost or gained X number of dollars.

Although one point always equals one dollar, the percentage value of one point movement can be different for two companies. Let's consider a simple example: if the fictional company TSJ Sports Conglomerate loses four points, dropping from $12 to $8, it would be experiencing a 33% drop in share price. Yikes! This is dramatically different from a four-point drop experienced by a company like Cory's Tequila Co., which is trading at $104. If CTC goes down to $100, this only represents a 3.8% decline.

Do not confuse points with percentages. When you hear someone say the stock dropped 10 points, the significance of that drop depends on how high the share price is.

It is important to note here that we are referring strictly to stocks, nothing else. People often refer to indexes, bond prices or currencies being up or down X number of basis points, and basis points are different. One basis point is equal to 1/100th of a percent, so if someone says the dollar is up 50 basis points, this is like saying it is up 0.5%.

RELATED FAQS

  1. What does it mean when financial news reports say that more issues were sold than ...

    This simply means that in a market, more stocks (issues) traded down for the day compared to the number of companies that ...
  2. Why does after-hours trading (AHT) exist?

    The advent of the Internet and electronic information exchanges has opened financial market trading to millions of investors ...
  3. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ...
  4. What is an odd-lot buyback?

    An odd-lot buyback occurs when a company offers to purchase shares of its stock back from people who hold less than 100 shares. ...
RELATED TERMS
  1. Bidder

    The party offering to buy an asset from a seller at a specific ...
  2. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position ...
  3. Registration Right

    A right which entitles an investor who owns restricted stock ...
  4. Float Shrink

    A reduction in the number of a publicly traded company’s shares ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  6. Graveyard Market

    A prolonged bear market where existing investors want to get ...
comments powered by Disqus
Related Articles
  1. Narrow Your Range With Stop-Limit Orders
    Investing Basics

    Narrow Your Range With Stop-Limit Orders

  2. How Nasdaq Continues To Innovate
    Stock Analysis

    How Nasdaq Continues To Innovate

  3. Understanding The Ticker Tape
    Investing Basics

    Understanding The Ticker Tape

  4. How To Invest In Toronto Stock Exchange ...
    Investing Basics

    How To Invest In Toronto Stock Exchange ...

  5. Use The Percentage Price Oscillator: ...
    Investing

    Use The Percentage Price Oscillator: ...

Trading Center