Why Microsoft stock dropped 10% yesterday.

I don’t usually post about business but this is interesting and gives an insight into current stock market dynamics.

Yesterday Microsoft stock price fell from 488 to 433. Despite a generally very good quarterly report from them, their cloud business – azure – only grew 38%. It was expected to grow 39%. And the whisper number was 40-41% expectation.

So a 1% miss on what is only a part (big part and growing) of Microsoft’s business leads to a 10% price drop. Further proof (my opinion) that the strong form version of the efficient market theory is over the top.

What it is, is a perfect example that the technology portion of the stock market is priced to reflect perfection. Any glitch at all leads to substantial price drops.

So bad news if you bought Microsoft stock Wednesday, expecting a perfect report yesterday. For people who have owned it for a long time and for the long term, they are still well ahead.

This morning the stock opened at a price of 439.