Shadow stock can mean several different things. One meaning is a

stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

of an already-

listed company A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in Over-the-counter (finance), over-the-counter markets. A public (publicly traded) comp ...

which has the same or similar

industry Industry may refer to: Economics * Industry (economics), a generally categorized branch of economic activity * Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery * The wider industrial sector ...

as a new-listed company. Since the stock price of new-listed companies mostly boosts up after being listed in a

stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...

, shadow stocks may also boost up to cope with the trend. However, as the increase in shadow stock price is irrelevant to the performance of the companies themselves, the stock price may drop again after such increasing power fades. Another is a virtual "stock" which is merely a calculated value that a company uses internally to motivate and compensate employees. The calculation strips out the fluctuation that would occur for a real stock due to the general market, and is set using only fundamental analysis of the company's financial performance. Another is a type of stock that passes a certain stock screening method developed by the

American Association of Individual Investors The American Association of Individual Investors is a nonprofit organization with about 150,000 members whose purpose is to educate individual investors regarding stock market portfolios, financial planning, and retirement accounts. AAII "assists ...

. In this sense, the stock is supposedly undervalued because it is "in the shadows" as far as professional investors are concerned. To pass the screen, the stock must be in the bottom decile of market capitalization, have a price to book value ratio in the bottom decile, and meet other criteria.

References

Stock market {{Econ-stub