The Difference between a spike and a re-rate

The Difference between a spike and a re-rate

Some terminology you’ve probably heard of is a spike or a re-rate these are common occurrences in investments and refer to share prices substantially changing.

Below shows an example of a spike, which means that the companies perceived value and share price has either risen or dropped significantly over a short period of time and done the reverse very shortly afterwards. There are many causes of this type of share behaviour, one of the most common in AIM being news anticipation rises with sell off’s on news release.

example of a share spike2

Next we move on to a re-rated share, re-rating means that the companies perceived valuation by investors is increasing, re-rating can also be referred to for shares doing the opposite (a downward trend) however it far less common, the below shows a steady re-rate over the course of a year.

share re-rate