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 is the difference between the S&P 500 and the Fortune 500?

    Learn what the Fortune 500 and S&P 500 are, how the companies are chosen to be on the lists, and the main difference between ...
  2. What kinds of securities are influenced most by systematic risk?

    Learn what systematic risk is, how investors can measure it with beta and how securities with a beta greater than 1 are most ...
  3. What are the SEC regulations regarding stock splits?

    Learn what SEC regulations govern stock splits and reverse stock splits, and understand what type of notice must be given ...
  4. How do investors calculate the present value of a future investment?

    Learn what present value is, how to calculate the present value of a future investment, and what formula investors use to ...
RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Einhorn Effect

    The sharp drop in a publicly traded company’s share price that ...
  3. Institutional Ownership

    The amount of a company’s available stock owned by mutual or ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. International Finance Corporation

    The International Finance Corporation is an organization dedicated ...

You May Also Like

Related Articles
  1. Stock Analysis

    The World's Top Ten News Companies

  2. Forex

    What Is Online Trading Academy?

  3. Investing Basics

    Why did Berkshire Hathaway create Class ...

  4. Stock Analysis

    Buyinb Facebook Stock, A Beginner's ...

  5. Investing News

    Alibaba's Top Competitors

Trading Center