Champagne stock – definition and meaning
In finance, a champagne stock is one that has significantly increased in value over a relatively short period. Typically, with a champagne stock, the price of a share doubles or triples in value quickly. Stock and share have the same meaning.
They are called ‘champagne stocks’ because their owners typically go out and celebrate their success with expensive champagne.
Any investors whose investment doubled or even tripled in value would be happy. Therefore, purchasing a champagne stock is every investor’s dream.
Champagne stock – examples
An example of a recent champagne stock is Volkswagen. The company’s stock value surged from around the €150 mark to more than €1,000 in less than a year. This occurred in 2008 after Porsche announced it had control of 74% of Volkswagen’s operations.
In 2013, American Airlines Group Inc. shares increased in value by 3,165%. They went up by that amount, that is, for people who bought shares at bankruptcy levels.
Also in 2013, Zone Technologies Inc. reported a 77% increase in service revenue. The announcement subsequently triggered enthusiastic purchasing by investors and sent stocks up by 980%.
Champagne stock after a crash
While some companies may see their stock price go through the roof, others can experience the opposite. In fact, some firms may experience both.
Concur Technologies saw its share price shoot up to $48.50 during the peak of the tech bubble in 1999. Concur Technologies is a global provider of on-demand employee spending management. By March 30, 2001, the company had crashed to $0.31.
However, by 2014 Concur’s share price reached $107. The company experienced two dramatic falls and a champagne stock rise.
Financial-Dictionary.theFreeDictionary.com has the following definition for champagne stock:
“Slang; stock that has very quickly risen in price. It especially refers to stocks with prices that have recently doubled or tripled.”
The term ‘champagne stocks’ may also refer to the shares of companies that make and sell champagne.