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. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  3. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  4. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  5. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  6. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
Trading Center