Why do stocks get clobbered so bad with earnings??

C

Cabin111

This thread is in general...No specific stock.

I just get so pissed off with the market. Say their earnings come in 1 cent below estimate...1 CENT!! So often the stock will drop 5-10% the next day. Also the company may choose not to provide earning estimates for the full year...Inflation, down economy.

These are companies that have good balance sheets, make money, and have normal debt.

Why wouldn't I hold (or buy) these companies for the long term??

I know a lot of pension/mutual funds get the willies...But can't this present with a buy and hold opportunity??
 
Well, had this occurred in a raging bull market, everyone would simply ignore the problem and possibly even take the stocks higher. But we're in a bear market. Nobody knows what might happen tomorrow and they're on edge. 'Better safe than sorry" is the motto of the day.
 
Not to be overlooked, is the issue that many companies are fully aware of "analyst consensus" and some companies wink and nod within the law, at the analysis by specific analysts... callouts sometimes occur on earnings calls.

Basically, still in 2022, "analysts" are double agents. Working for their firms and it's wealthy clients as well as for the appearance and standing to and within their street peers. These 2 sides have little in common with general retail. IOW, analysts suck!
 
So often the stock will drop 5-10% the next day.
More...

Studies have shown that there is a persistent bias where the market over-reacts to misses, even the most minute ones. This is why a lot of experienced traders/investors try to arbitrage the opportunities before the market re-evaluates.
 
The_Krakenite said:
Studies have shown that there is a persistent bias where the market over-reacts to misses, even the most minute ones. This is why a lot of experienced traders/investors try to arbitrage the opportunities before the market re-evaluates.
More...

I'll wait for a bad quarter for Walmart, Schwab, and Apple. I'll buy on the bailing...
 
What are you talking about? If anything, this week we have seen many of the US's leading corporations report abysmal sales numbers and much worse earnings yet their stocks shot up 10% or more. All that because expectations were set very low, even lower than reported numbers. The raw numbers looked very bleak across the board for some notable exceptions.

Cabin111 said:
This thread is in general...No specific stock.

I just get so pissed off with the market. Say their earnings come in 1 cent below estimate...1 CENT!! So often the stock will drop 5-10% the next day. Also the company may choose not to provide earning estimates for the full year...Inflation, down economy.

These are companies that have good balance sheets, make money, and have normal debt.

Why wouldn't I hold (or buy) these companies for the long term??

I know a lot of pension/mutual funds get the willies...But can't this present with a buy and hold opportunity??
More...
 
I don't think you can compare NetFlix, a company broken by the CEO who thought it wise to go Woke & Broke by jumping on the 'whatever crazy is trending' bandwagon routine...

There is a catastrophic difference between missing earnings by a single penny, and losing over a million subscribers in a single quarter in what was supposed to be a growth-company.
 
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