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Investopedia explains 'Overreaction'
For example, suppose that company XYZ releases its annual operating results, which beat analyst expectations by a mere penny per share (generally not a big deal). Traders and investors, however, subsequently bid up the stock to unprecedented highs. After a couple of days of trading, the stock then falls down to a price just above its price before the earnings release, which represents the stock's current intrinsic value.
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