Reflexivity

Reflexivity is the idea, associated with investor George Soros, that a stock's price and a company's underlying fundamentals aren't always cleanly separate: sometimes price itself feeds back and changes the fundamentals rather than simply reflecting them. A rising share price can give a company cheaper access to capital, letting it raise money or make acquisitions using stock as currency in ways that accelerate real growth. A falling price can work in reverse, raising borrowing costs and narrowing a company's choices at exactly the moment it needs them most.

This matters most for a company whose growth depends on raising money at a high valuation. If confidence breaks, the falling share price makes new funding more expensive and slows the growth the valuation assumed, so the price and the fundamentals fall together. Before relying on that kind of growth, check how much the business depends on issuing new stock or debt to keep it going, and how long its cash would last if that door closed.