Misleading Headlines

Seen on Quartz:

Six years ago, Domino’s admitted it made terrible pizza. Now its stock returns have outpaced Google’s

Just say it with me: so what? Stock performance has nothing to do with the value of the company, it only reflects how the investors view the potential of the company relative to its current position. The headline is awful. Or perhaps they were hoping it’d act as a hook, since it seems ridiculous. But only for the naive investor; the rest of the investing world would have just shrugged its shoulders and not bothered to read it.

At the end of the article they admit as much:

Some of [Charlie] Bilello’s [director of Research at Pension Partners] Twitter followers pointed out that the two companies have radically different market caps—Domino’s is $8 billion, and Google’s over $560 billion—which puts the finding in perspective.

Although even that doesn’t really do the situation justice. Six years ago, Domino’s was well known to be substandard, and then they improved. Google lead the industry then, and still does. It’s harder for them to improve their stock situation, although certainly possible.

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About Hue White

Former BBS operator; software engineer; cat lackey.

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