New York Times’ stock (NYSE: NYT), a diversified media company that includes newspapers, internet businesses, television, and radio stations, experienced almost a 5% drop over the last week (five trading days) to levels of around $48 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for NYT stock average around 3.3% in the next one-month (twenty-one trading days) period after experiencing a 4.5% fall in a week.
But how would these numbers change if you are interested in holding NYT stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test NYT stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF NYT stock moved by -5% over five trading days, THEN over the next twenty-one trading days, NYT stock moves an average of 3.6%, which implies an excess return of 0.9% compared to the S&P500.
More importantly, there is a 60% probability of a positive return over the next twenty-one trading days and a 50% probability of a positive excess return after a -5% change over five trading days.
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Some Fun Scenarios, FAQs & Making Sense of New York Times
Question 1: Is the average return for New York Times stock higher after a drop?
Answer: Consider two situations,
Case 1: New York Times stock drops by -5% or more in a week
Case 2: New York Times stock rises by 5% or more in a week
Is the average return for New York Times stock higher over the subsequent month after Case 1 or Case 2?
NYT stock fares better after Case 1, with an average return of 3.5% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.3% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how NYT stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold New York Times stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For NYT stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for New York Times after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although NYT stock appears to be an exception to this general observation.
NYT’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for NYT stock by changing the inputs in the charts above.
While NYT stock may have moved, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for New York Times vs. Vertex Pharmaceuticals