News of the sudden passing of Mr Sim Wong Hoo, founder, Chairman and CEO of Creative Technology (SGX: C76), earlier this week got here as a shock to Singapore. Mr Sim was 67.
Unlike many Singaporeans whose first interplay with Creative Technology would possible be considered one of their fashionable merchandise corresponding to their sound blasters or MP3 gamers, I first know of Creative Technology as a inventory.
On the Teletext the place I used to take a look at share costs within the 90s, Creative Technology stood out due to its excessive share worth. At its peak in 2000, the corporate share worth was greater than $58 per share, the best on the SGX.
One fixed that has been within the firm since day one was Mr Sim. Since founding the corporate in 1981, he has been its Chairman of the Board and CEO.
While many nice corporations do outlive their founders, what’s much less widespread is the sudden passing of a founder who’s the CEO of a publicly traded firm, and nonetheless actively concerned within the enterprise on a day-to-day foundation. According to news reports, Mr Sim passing was a “unhappy and sudden improvement” and he was working the evening earlier than he handed on.
The Market Doesn’t Always React The Way We Think It Should
Like it or not, the inventory market is a measurement of traders ‘sentiment. Even as tributes for Mr Sim proceed to dominate headlines in Singapore, an fascinating commentary may be made on how its share worth has carried out this week.
On 5 January, the day that Creative Technology introduced the passing of Mr Sim, the corporate share worth went up about 25% from $1.41 (closing on 4 January) to shut at $1.77. Creative Technology’s share worth closed at $1.79 for the week.
When I first heard that Mr Sim had handed on, I believed this could be unhealthy information for the corporate. After all, Mr Sim is the founder and nonetheless actively working within the firm as its CEO so his sudden demise would absolutely create challenges for the corporate. By the tip of the day, nonetheless, it was clear that the market remains to be bullish concerning the firm’s future.
The demise of a charismatic founder doesn’t sign the tip of an organization. The finest instance I can consider is Creative Technology’s foremost opponents within the early 2000s – Steven Paul Jobs and Apple.
Prior to his demise, Steven Jobs was synonymous with Apple and the corporate grew to change into one of many world’s greatest and most dear corporations throughout his time as CEO from July 1997 to August 2011. During this era, Apple’s share worth went from about USD 0.14 to USD 12.26.
After his passing in October 2011, Apple continued to carry out effectively as an organization beneath Tim Cook’s management and its shares at the moment are buying and selling at about USD 129 as of the tip of 2022. It’s nonetheless one of many greatest and most dear corporations on the planet.
While tragic, the passing of a founder and CEO doesn’t essentially make traders bearish concerning the future development of the corporate. Companies can, and do, proceed to thrive even after their founders are now not round.
The Market Can Disconnect Itself From The Emotions Of The World
The morally appropriate response from the inventory market that may make us snug could be for Creative Technology’s share worth to say no this week, as the corporate takes the time it must course of what the sudden demise of its founder and CEO meant for the way forward for the corporate.
Tragic as it could be, the truth that share worth spike reveals how the market can behave in another way from what we expect it ought to and it’s not simple to elucidate the explanation why. However, one factor we all know is that traders will put their cash into what they imagine in. This appears to recommend that the market is assured that Creative Technology, the corporate that Mr Sim has spent his life constructing, would proceed to do effectively sooner or later.
Top Image Source: Creative Technology
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