๐๐๐๐๐๐Earnings is key๐๐๐๐๐๐
Investing is heavily dependent on expectation where "Stocks are bought on expectations, not facts" quoted from Gerald Loeb. ![]()
The expectations of investors are in turn driven by the numbers raised during the earnings announcement, how much surprise/dismay arise based on the announced figures?
The expectations of investors are in turn driven by the numbers raised during the earnings announcement, how much surprise/dismay arise based on the announced figures?
Will the profitability of the company be continuous based on the earnings Y-T-Y growth? For this, the growth rate is key ๐.
Let's take a retrospective look at one of the smart money's favourites: $Chipotle Mexican Grill (CMG.US)$
For this example, the positive surprise in earnings growth led to a reaction from the market catapulting the stock price to 1800 & 1900 range from the 1600 range. Lo' and behold, this was considered "expensive" to some given its trading P/E multiple of 40 in Jan 2020.
$Chipotle Mexican Grill (CMG.US)$
$Chipotle Mexican Grill (CMG.US)$
The "high" P/E multiple is justified based on the growth of the company's earnings and the fast company expansion results in such P/E multiple where investors are willing to buy at the current level as they expect the earnings to grow in comparison to other low growth companies.
Besides numbers, how could earnings release be complete without Guidance?
To put it simply, guidance are projections be it for sales, drivers to sales etc.![]()
A classic example: $Netflix (NFLX.US)$
Besides numbers, how could earnings release be complete without Guidance?
To put it simply, guidance are projections be it for sales, drivers to sales etc.
A classic example: $Netflix (NFLX.US)$
The market reacted negatively (-7.40%) simply based on guidance that subscriber growth would be dampen, bearing in mind the driver for $Netflix (NFLX.US)$'s earnings growth.
The market is a vibrant place where not all companies are equal![]()
hence guidance release for other companies would differ, e.g. $Tesla (TSLA.US)$ focuses on vehicle deliveries ![]()
So earnings is truly one key event to a stock price, without doubt. The volatility surging (based on possible erratic up or down stock movement) is expected during the earning period which to some is another window of opportunity.![]()
Trade safe everyone! None of the above is financial advice and should not be taken as one.![]()
$Amazon (AMZN.US)$ earnings 28 Oct 21
$Phunware (PHUN.US)$ earnings 8 Nov 21
$AMC Entertainment (AMC.US)$ earnings 1 Nov 21
$GameStop (GME.US)$ earnings 14 Dec 21
Source: Nasdaq.com
A short poll: Do you trade during earnings?
The market is a vibrant place where not all companies are equal
So earnings is truly one key event to a stock price, without doubt. The volatility surging (based on possible erratic up or down stock movement) is expected during the earning period which to some is another window of opportunity.
Trade safe everyone! None of the above is financial advice and should not be taken as one.
$Amazon (AMZN.US)$ earnings 28 Oct 21
$Phunware (PHUN.US)$ earnings 8 Nov 21
$AMC Entertainment (AMC.US)$ earnings 1 Nov 21
$GameStop (GME.US)$ earnings 14 Dec 21
Source: Nasdaq.com
A short poll: Do you trade during earnings?
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Spearhead : excellent
cowabanga OP Spearhead :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")