What does the term "yo-yo stock" mean?


Quick Answer

The term "yo-yo stock" refers to any stock with a highly fluctuating value, that moves up and down like a yo-yo, as stated by Nasdaq. These stocks are characterized by high volatility and trade at both high and low prices within short time frames, according to Commonwealth Financial Network.

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Full Answer

Figurative use of yo-yo to describe up-and-down movements, similar to the motion of the well-known toy of the same name, dates to 1932, as noted in the Online Etymology Dictionary. Market analysts' use of the adjective highlights the unstable nature of particular stocks and of the general market, in an attempt to help investors assess risk. Even though market instability can yield losses, volatility is often caused by panic and speculation and is not necessarily an accurate representation of the true financial or economic environment, as noted by Commonwealth Financial Network.

Two popular technology stocks, Netflix and Facebook, were included on a list of reported yo-yo stocks in 2014, due to wild fluctuation in their market prices. Netflix saw price changes of 28 percent in both gains and losses over a two-month period from March to May. Facebook realized a 30-percent gain in the same time period, rebounding from significant falls, as reported by Forbes.

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