HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
answers....
first you need to let go of what you know about real stock markets. HSX does it best to do what real stock markets do but has had to make a few variations.
HSX determines a IPO price for new stocks listed on the exchange. The first day that an IPO is offered at HSX the price is frozen and does not move until 12am PST the next day. Once the price is unfrozen player trading is the sole mechanism that moves the price. If players invest long then the price goes up, if players go short the price goes down. HSX has a computer program called the 'Virtual Trader' that computes all this and alters the price as needed.
When a movie gets to opening weekend it 'adjusts'. On Friday at 10am PST the price again is frozen and the stock is no longer tradable. HSX has found that a majority of wide movie releases usually make 2.7 * 1st weekend box office in the first four weeks. When weekend box office is reported on sunday morning, HSX 'adjusts' the halted stocks' prices to reflect 2.7 * opening box office.
if you were holding stock XYZ at $30 and the stock adjusted to $27 then you lost 3pts per share
if you were holding stock XYZ at $20 and the stock adjusted to $27 then you gain 7pts per share
after the adjust occurs on sunday the prices are still frozen but the stocks become tradable. Prices of weekend openers unfreeze 12am Monday PST and the stock goes back to normal (only affected by traders) until the movie delists after its 4th weekend (where it cashes out at whatever it did in box office).
Newbee question Mar 18, 11:40
answers... Mar 18, 12:10
Follow up question Mar 18, 12:39
are you asking before or after the IPO, learning the hard way somebody will always overpay :) {nm} Mar 18, 14:28
After the IPO. Mar 18, 14:39
answers.... Mar 18, 15:24
Wow. I've wanted to know this for a while... Thanks for explaining it in detail. {nm} Mar 19, 11:12