An alternative take on the share price chart

One of the things we spend a lot of time thinking about at Pellucid is how to improve day-to-day pitchbook charts, what we call “pitchbook essentials”. While the Library contains a typical version of most charts, it also includes alternatives to provide more context, sharpen a point, or lead the conversation in a specific direction. One of these is the share price chart.

I’ve written before about why the share price chart is a waste of time, and since writing that post have received requests for additional alternatives. The reason I take the share price chart to task is not because I think it’s useless, but because it often doesn’t add any value to the conversation. The CFO is likely to know more about her company’s share price and its movements than you ever will, so why tell her something she already knows? Instead, create a chart that adds to her knowledge.

One option for this is instead of just showing the share price, explain what has driven any changes. Go beyond looking at what has happened and instead explain whysomething has happened.

Below is an analysis deconstructing Best Buy’s share price movements over past twelve months.

It's a simple graphic yet depicts the standalone contributions of macroeconomic developments, overall market movements, incremental volatility in the industry, and ultimately company-specific factors to a company’s stock price return. It is a thoughtful alternative to a generic share price chart, showcasing not what the CFO already knows (how her share price has changed), but the explanation of why. Importantly, once the broader macro factors are explained away, the remaining company-specific factors show which portions the finance team can reasonably be held responsible for. You can even break it out further into firm-specific portions

I’ve found this analysis really resonates with CFOs. Not only are do they lean in to hear what I have to say (a pleasant change after years of eyes glazing over as soon as we get to the share price chart), but often the simplicity of the waterfall chart makes it great ammunition for their own upcoming board presentation. And you definitely want your slides making an appearance there.

What do you think? More interesting than a generic share price chart? Are there any other essential type charts you would like updated or improved? Email me at adrian.s.crockett@gmail.com.

If you're interested in the actual analysis behind this, you can email me for that, too.

Numbers in this post are not reflective of the actual data.