Summit Materials Inc (NYSE: SUM) stock is being reported by some tickers as being down 20% premarket. Other tickers appear to show no – or very little – change from last night’s closing price. Our problem as traders is trying to work out which reporting stream is correct on this.
It is feasible that Summit drops that 20%. The company provides aggregates into the US market. So, the now obvious failure of Build Back Better – failure maybe too strong, the length of time it’s going to take before anyone purs concrete perhaps – might dial back hopes.
It’s also true that Summit was looking good and expensive recently. The stock was up 80% over the year as hopes for that BBB and general infrastructure spend rose. The result of that increase in the Summit stock price was that future earnings were being fully, perhaps more than fully, valued.
We might also think of more detailed reasons for problems. Say, the more general reports across the economy of transport difficulties. Or perhaps all the drivers are in Ottawa shouting at Trudeau?
The thing is there’s no news out there that could or should explain this stock price movement. Nothing on the Summit investors page. Nothing in the usual news sources. So, it’s a little difficult to evaluate quite why there is this stock price movement.
Unless, of course, Summit Materials is a victim of a glitch in the matrix. We might think that our modern world doesn’t do this but oh, yes it does. We saw this with Lloyds Bank a little while back. Certain tickers were showing that the Lloyds share price had jumped 45% in moments, which would have been news if they had. Actually, it was a technical issue about the redemption of a class of preference stock. Or there was DMGT (the owner of the Daily Mail) which even the stock exchange was reporting as 75% down on the conclusion of a successful takeover big. They’d missed that the success of the bid changed the class of share that was being quoted – that explained the price difference.
In the absence of any further explanation of what is happening to the Summit Materials stock price, we’ll assume, for the moment, that it’s an information glitch in the system. We could indeed imagine the Summit price dropping 20% in one leap, it has been looking very richly valued. So, we can imagine a turn in valuation triggered by some new information or other. But we’d expect there to be news which triggers it, not just a change of opinion in an information vacuum. So, in the absence of that news, we’ll run with a glitch instead.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.