Shares of Farfetch Limited (NYSE: FTCH) finished Monday 8% higher than where they began. The stock had spiked as much as 11% higher before settling back down by the end of the session. Typically, a move this big is associated with some sort of fundamental news. That’s not the case for Farfetch today. But here’s why investors shouldn’t be too surprised with this kind of volatility.
In the stock market, all stocks are assigned a beta value. This metric is a measure of volatility — how much it spikes up or down relative to the stability of the market average. For its part, Farfetch has a beta value of about three. The implication is this stock swings about three times wilder than the rest of the market.