We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.


Upside

Categories: Investing, Metrics

Next time you see one of those idiots fast-stabbing a knife between his spread fingers on a wood table at a bar, you have to ask, "Dude. What's the upside?"

Yeah. So...investors care a lot about the upside, usually reflected as a price against what the downside costs. That is, they're investing in a company with $1 in earnings this year, but they're paying $50 a share. Well, the downside is that the company doesn't, in fact, print $3 a share next year, making that $50 look cheap. Instead, they print $1.50 and the stock trades down $15 or so. The upside is that the company really does print $3, then $5 the next year, when the stock is likely well over $100 a share. No bloody fingers.



Find other enlightening terms in Shmoop Finance Genius Bar(f)