Microsoft Stock Has Gained Almost 20% Over The Last Quarter, Is There More Room To Run?
Microsoft (NASDAQ:MSFT) stock is up by close to 20% over the last quarter, rising from levels of about $135 in early October 2019 to around $161 now. Could the stock gain another 10% over the next month? Or, is it time to sell – what’s the chance the stock could, in fact, lose 5% over the next month?
Turns out, after scoring a 20% gain over a quarter, there is only about a 4% chance of another 10% increase in Microsoft’s stock over the next month. In fact, the chances of a 5% loss over the next month are much higher at about 24%, and goes up to 51% over the next quarter.
Curious about the possibility of a 10% rise over the next quarter? Test the Trefis Machine Learning Engine for Microsoft stock to see chances of rise or drop.
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In addition, Microsoft earnings are expected around the 29th of January. If the company misses expectations, and stock drops, say 5% – could it recover from that drop in a month? According to the Trefis machine learning engine, chances of a rebound in Microsoft stock after a 5% drop over a week, are about 8% over a week’s time, and go up to almost 19% if you wait for a month! See how this compares with S&P 500 in our separate Machine Learning Analysis of the S&P 500
In addition, below we discuss other interesting scenarios and how to make the most of the Trefis machine learning engine
Question 1: Does a rise in Microsoft stock become more likely after a drop?
Answer:
Consider two situations,
Case 1: Microsoft stock drops by 5% or more in a week
Case 2: Microsoft stock rises by 5% or more in a week
Is the chance of say a 5% rise in Microsoft stock over the subsequent month after Case 1 or Case 2 occurs much higher for one versus the other?
Yes. The chances of a 5% rise over the next month (21 trading days) is about 32% for Case 1, i.e. when Microsoft’s stock has just suffered a loss, versus about 24% for Case 2.
Question 2: What about the other way around, does a drop in Microsoft stock become more likely after a rise?
Answer:
Consider, once again, two cases
Case 1: Microsoft stock drops by 5% in a week
Case 2: Microsoft stock rises by 5% in a week
The chance of a 5% drop after Case 1 is about 22%, versus about 28% for Case 2. For comparison, in case of the S&P 500 and many other stocks, it turns out the chances of a 5% drop after Case 1 or Case 2 has occurred are actually quite similar. View our Machine Learning Analysis of the S&P 500
Question 3: Does patience pay?
Answer:
If you buy and hold Microsoft 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 after a drop of 5% in Microsoft stock over a week (5 trading days), while there is only about 18% chance the stock will gain 5% over the subsequent week, there is more than 46% chance this will happen in 3 months, and 54% chance it’ll gain 5% over a year (about 250 trading days).
The table below shows the trend for Microsoft stock:
Question 4: What about the possibility of a drop after a rise if you wait for a while?
Answer:
There are two opposing forces at work on Microsoft stock here. First, is the general positive bias for Microsoft stock (and for most other stocks) – that pulls the stock upwards with time. Second, the basic chance of a drop, as a chance of any event happening, should simply increase with the passage of time.
After seeing a rise of 5% over 5 days, the chances of a 5% drop in Microsoft stock are about 29% over the subsequent month of waiting (21 trading days) and this increases to 35% when the waiting period is a quarter (63 trading days). But the probability of a loss shrinks slightly if the waiting period is a year or more to 34%.
Related Analysis:
- Apple Stock Is Up 25% Over The Last Quarter. Ask The Trefis Machine Learning Engine If It’s Time To Sell.
- Trefis AI Engine Answers: How Resilient Is Netflix Stock?
- Trefis AI Engine Answers: How Resilient Is Amazon Stock?
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