For some of the investors who've witnessed plenty of obscene share price reactions to news I just wanted to get some thoughts.
Recently, a stock called FAR exploded in response to oil being found off the coast of Senegal. With news announcements that big, would you generally expect to see the share price respond then correct - or would you expect it to stabilise at it's new level?
My thoughts would be that in the example of FAR investors would flock to buy driving share price up, meanwhile many early investors would be selling. Then, after the honeymoon period of around a week and throughout the following months as the company sells the oil the share price shouldn't be doing anything outrageous other than grow at a standard rate as cash flow reports are released. Of course fundamental data eg assets/liabilities/equity will also play a role but assume the company's financials are stable.
My goal for asking this question is not to try and have people evaluate a penny dreadful for me (i have no intention of investing in this stock) but rather understand how the market responds to different types of acute news and then what it's reaction is after the news' honeymoon period.