Driver

Definition of 'Driver'


Anything that could materially affect either a company's earnings or the price of its stock. Every company will have its own unique drivers, although some of the most common drivers include:

-The release of a new product or service
-New financing
-Commodity or resource prices
-Activities of competitors
-Prospects of a particular division of a company
-Legislation
-Litigation

Stock drivers have no pure quantitative units of measurement, but are more qualitative in nature.

Investopedia explains 'Driver'


The best investors will identify the three or four key drivers for the stocks they own and follow the status of those drivers religiously, knowing that they hold the key to the overall performance of the stock.

For example, Coca-Cola and PepsiCo are both large, established companies that mainly compete with each other. For both Coke and Pepsi stock, the relative market share that one company has over the other is a key driver. For a grocer, like Albertson's, margins are a large driver of company performance, while relative market share is less significant.



comments powered by Disqus
Hot Definitions
  1. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  2. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  3. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  4. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
  5. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
  6. Marginal Analysis

    An examination of the additional benefits of an activity compared to the additional costs of that activity. Companies use marginal analysis as a decision-making tool to help them maximize their profits. Individuals unconsciously use marginal analysis to make a host of everyday decisions. Marginal analysis is also widely used in microeconomics when analyzing how a complex system is affected by marginal manipulation of its comprising variables.
Trading Center