With Halloween quickly approaching I found myself seriously thinking about how much a stock is affected during the Holiday season itself. One of the biggest factors for a stock to move is their quarterly financial reporting. So how can a stock react negatively or positively during the Holiday if the financials won’t come out for 2 months after the Holiday?
You obviously can’t buy The Hershey, Co. stock a month before Halloween and expect to make money off of it because you know that a lot of people are going to buy candy. If that were the case we would all be rich off of every candy and toy store out there. These companies know and build their balance sheet with the Holidays in mind. Therefore it’s not going to be a big surprise or jump in sales when the Holiday comes because they are already planning for it. So what is it that will make a stock react during the Holidays? There are 2 important factors during the Holidays and 1 important factor after the Holidays that will affect a stocks movement.
During the Holidays a company will do well if analysts are predicting that the Holiday season will be better than projected. Even though we won’t see the actual profits on a report for a couple months after the Holiday season, the industry has a general idea of how well it is going to go. So when December 12th comes around and the shopping centers, toy stores, boutiques, and all of the other stores are full of Christmas shoppers and a news report comes out saying that people are expected to spend more money this year on presents, then we will see a jump in stocks based solely off of speculation and analytical reporting.
The other move maker for companies during the Holidays are if they will be releasing a new product. Companies releasing a product for the Holidays will usually have a good reaction to their stock price if the release is highly anticipated. The above mentioned are usually the only two real move makers for stocks during a Holiday season. Don’t forget that all of the normal activities can and still do occur during the Holiday season (mergers, acquisitions, bakruptcy, etc.).
The only true factor for a Holiday season and how successful it was for a company is when the 4th quarter financials come out. This will not be until February or March following the Holiday seasons. Those financials and financials alone are the only true way to see if a Holiday season was good for a company.
So to answer the question at the beginning of this blog post, no I do not think the Holidays greatly affect a stock. I believe there are always going to be events happening during Holidays that affect stocks but the majority of the companies benefiting from the Holidays will not see big or sudden changes in their stocks during that time.