A price gap refers to a phenomenon in the stock market where the opening price of a stock is significantly different from its closing price the previous day. This usually occurs when important news about the stock's value is announced after the market has closed. Factors such as positive or negative earnings reports or a buy-out can cause a gap in the stock's price. While stocks that gap at the open usually return to the previous close before moving again, this is not always the case. If the news is particularly impactful, such as projected higher earnings, the stock may continue to move without a pullback.
