Question

What happens to the price of the stock of a company if it underperforms?

Answer 1

When a company performs below the expected projections of the market the stock price see's a decline. Its mainly because the current price in the market is based on expections and sentiments and change in price is distated by information which can be both positive and negative. Underperformance is negative information which when discovered or shared would result in the price being adjusted to accomodate for that new piece of information which in this case is fall in share price.