I still don't really get all the movement of the starbonds. If they're the average gross of their last three movies, how come they keep changing? Are they factoring in the expected gross of their next movie?
I don't fully understand it myself.
I know that the constant growth of a starbond's value is predicated on the predicted box-office potential of their next movie, but the problem is that I still don't know where they are getting that figure, unless it is aggregated from a variety of Hollywood trade publications that I'm not reading.
Zombipanda said:
For that matter, I don't get what causes film stocks to fluctuate. Can anyone explain?
The value of a moviebond is based on the 'expected box office gross' of the film, and adjusts itself after release depending on how much money it is making.
For example, if a movie is valued at $200 a share, then it is expected to make $200 million in the first four weeks of its wide release, but if it does only $50 million during opening weekend then that value will correct itself accordingly (let's say it plummets down to $100 a share).
However, just because that happens it doesn't automatically mean that the stock is going to stay in that decreased value, because this re-evaluation of the stock value will adjust on a daily basis depending on the fluctuations of its business. It is possible that if the box office returns are consistently average, this hypothetical stock will climb back up to $150, and if it grows well may even go back to $200 or more.
The reason why this opening weekend is so important is because past box office history has shown that the three days that constitute an opening weekend constitute a significant percent of a film's total four-week profit, and is thus used as a predictor of its total profit, while weekdays tend to have a more varied percentage relationship to that total.
Joe Kalicki said:
Ourchair has a theory about trading affecting prices, but I don't really understand.
Basically, if the HSX is supposed to have the same economic physics as the real stock market, then the mere act of trading should affect a stock's value.
For example, should everyone decide to sell off all their shares of a particular moviestock or starbond, then that should devalue the stock such that it'd plummet in value and negatively affect everyone who is still holding onto it. On the other hand, a mass purchase of the shares would increase the value of the stock.
From what other people have been telling me, they've noticed that after a share hits a majorly obscene spike in value increase it usually goes down in value significantly. I've heard this phenomenon referred to as 'correcting'. The stock is correcting itself after such a sharp increase in value to reflect a more accurate appraisal of it. This is because after the spiked increase, most everyone sells the stock to profit off the increase in value.
Remember, stock trading is about holding onto things in the hope of selling them at a later date for profit. This massive post-increase selling decreases the stock's value because the act of selling means that those who hold the stock don't believe it is worth holding any longer to score better profit. Hence the devaluation.
