Question

You work for Bubba Gump’s Gumbo Emporium, where their specialty is “Mmmm-mmmm good Gump Gumbo”.   Your boss just indicated that the S&P 500 (stock market index) is down by 10% for the year, and she’s concerned what that might mean for Bubba’s.   What might some of her concerns be?   Does it matter that Bubba’s is publicly traded, but not part of the S&P? Why or why not?

Answer 1

when the overall stock market is down, it will mean that stock market is representative of the overall economic movement and when the economy will be showing downward momentum, it will mean that the demand for the product is likely to go down and it will be reflecting in the lower profitability and lower sales for the company.

Yes, it will matter when the company is listed because then the shares of the company is also likely to go down with the standard and poor 500 because it is the standard benchmark which will be reflecting that the economy is slowing down and the benchmark indexes are correcting so the company's stock prices are likely to go down when it is listed

Even if it is not a part of standard and poor 500, it will go down with the index most probably because it will be moving in line with the economy