Why is my stock going down even though it’s so good? Here’s 3 reasons why!

Nick Sundich Nick Sundich, August 24, 2023

Why is my stock going down even though it’s so good? That’s a question many investors ask themselves. You could think like Warren Buffett and think the market will make the right call in the long-term, but that doesn’t make the paper loss any better.

In this article, we look at 3 possible answers to that question.


What are the Best ASX Stocks to invest in right now?

Check our buy/sell tips on the top Stocks in ASX

Why is my stock going down in spite of being so good? Here are 3 possible reasons


1. Bad IR

A company may be a good company but fail just because it has poor IR (Investor Relations). To put it another way, a company may be able to sell its goods or services but if it cannot sell itself as an investment proposition, it won’t be bought. The jump from private to public is always a big step for a company no matter where it is in its journey. There is far more scrutiny on the company from a much larger pool of investors.

Now, one may accept that it is unreasonable for companies to offer a running commentary on its day to day operations. But it may not suffice to only update shareholders at reporting season or when the company needs capital.

At the very least, the company should conduct meetings with existing and would-be institutional investors on a regular basis. Because they are the ones that determine the company’s share price more than retail investors.


2. Not a hot theme

There are always good and bad companies in any sector. But sometimes, the market may disregard companies just because they are in a sector perceived to be a poor space to be in. Just look at all the consumer discretionary stocks sold off just because investors feared consumers would cut back their spending. Yes, this was true for many companies. But not for all of them – just ask companies like Silk Laser and Breville.

The key if this scenario is true is to be patient with your stock and wait for it to re-rate because it will…one way or another.


3. Maybe it isn’t that good

Yes, this is likely too. The key to figuring out if this situation is correct is to go beyond the metrics put out in your company’s annual report, especially if they are non-accounting metrics like Gross Transaction Volume. Read your company’s financial statements, particularly the cash flow statement, and see if the company’s words about how good things are match reality.

A company may be saying it is well positioned because it has good EBITDA, but actually has a loss because it has high interest and (lo and behold) interest actually is a cash outflow! At the end of the day, no company will tell you ‘We’ll just try our best but cannot provide any guarantees beyond that’. No, they’ll all say they have a good market, experienced management etc.

This is true with some companies, but not all of them.


Stocks Down Under Concierge is here to help you pick winning stocks!

The team at Stocks Down Under have been in the markets since the mid-90s and we have gone through many ups and downs. We have written about every sector!

Our Concierge BUY and SELL service picks the best stocks on ASX. We won’t just tell you what to buy – we give you a buy range, price target and stop loss level in order to maximise total returns. And we will only recommend very high conviction stocks where substantial due diligence has been conducted.

Our performance is well ahead of the ASX200 and All Ords.

You can try out Concierge for FREE.




There’s no credit card needed – the trial expires automatically.



Recent Posts

Reece shares (ASX:REH): A great company, but significantly overvalued compared to its peers

Reece shares (ASX:REH) represent ownership in one of two plumbing companies in the ASX 200 – the other being Reliance…

Weebit Nano

Weebit Nano (ASX:WBT): Here’s why it has done so well and why the next 2 years will be extremely exciting!

Our long-time followers would know we are big fans of Weebit Nano (ASX: WBT). This company has delivered stellar returns…

investing in stocks for retirement

Investing in stocks for retirement: Here’s why you should give it serious thought

Investing in stocks for retirement is an excellent option to consider. Investing in stocks can help you build a substantial nest…