Was Steve Jobs' resignation good for Apple stock?
Why did shares go up after the CEO resigned? Because investors got some much-needed certainty.
Apple shares closed at $376.18 that day. Over the next week, shares would top $390 for three straight days.
Why? Jobs' absence will certainly be a huge blow to the company (though he's now serving as chairman of the board). How could investors be happy with his departure?
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As it turns out, what investors really love is certainty, writes Dirk Schmidt at Asymco, an industry analysis firm. The stock market has responded well to moments of Apple certainty, such as Jobs' Jan. 5, 2009, disclosure that, despite a hormone imbalance, he would continue as CEO.
What investors respond badly to are moments of uncertainty, such as Jobs' Jan. 17, 2011, message that he would be taking a medical leave of absence.
Clearly, the chance that Jobs would resign permanently as chief executive was already baked into the stock price. But Apple investors are also becoming more comfortable with Tim Cook running the company as the new CEO, Schmidt writes. "Steve Jobs’ resignation as CEO, as sad as it may be, has reduced unsystematic risk from the stock and therefore 'boosted' the share price performance," he adds.
Friday, by the way, Apple shares have fallen 2% to $376.44.
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