Companies who float on the ASX know full well that their share price will not be set by the fundamentals but more by the views of the various analysts that they have to pander to on a regular basis. If you do analyst briefings and know how to keep them happy then your share price will rise when they tell their clients to buy and vice versa.
Ultimately the fundamentals certainly play a part. A company worth $1 on fundamentals cannot sustain a $5-$10 price forever no matter how much praise the analysts pour on them (but $2-$3 is quite sustainable if you keep them happy). On the other hand if you displease them the same company could find their shares down around 30 cents for quite a while. The analysts in the larger companies wield quite an unreasonable amount of power but they direct the investments of the people with the money.
On the other side the people who float the company usually walk away with a very large sum of money so don't mind playing the analyst games.
BTW My view is FCL deserved what it got. You can't do multiple downgrades in a short time without getting a reaction like they have.
FCL Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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