Earnings and stock prices: what you need to know
It is safe to say that earnings are one of the biggest catalysts in the world of stocks. A single good quarter could see a stock run up 20% right after earnings, yet a quarter that misses estimates can make the price go south in an equally violent way.
Earnings, by principle, give an idea of how well a company is doing. Basic metrics like EPS and revenue growth can either instil or weaken investor confidence.
Some companies which had great earnings in the previous quarter are $Tesla(TSLA.US$ and $XPeng(XPEV.US$ . Yet, some companies do fall short. For example, $Snap Inc(SNAP.US$ had a pretty disastrous earnings report released a few days ago.
The question would then be: How much does it matter? Should you sell a stock when earnings are bad? Should you all-in on a stock which had a record quarter?
In the long run, the influence on a stock's price due to earnings isn't as volatile as it may seem. Some companies may struggle at certain times, but they still realize their potential eventually. The converse is true. Some companies may suddenly stumble fundamentally despite a track record of good earnings.
Earnings, by principle, give an idea of how well a company is doing. Basic metrics like EPS and revenue growth can either instil or weaken investor confidence.
Some companies which had great earnings in the previous quarter are $Tesla(TSLA.US$ and $XPeng(XPEV.US$ . Yet, some companies do fall short. For example, $Snap Inc(SNAP.US$ had a pretty disastrous earnings report released a few days ago.
The question would then be: How much does it matter? Should you sell a stock when earnings are bad? Should you all-in on a stock which had a record quarter?
In the long run, the influence on a stock's price due to earnings isn't as volatile as it may seem. Some companies may struggle at certain times, but they still realize their potential eventually. The converse is true. Some companies may suddenly stumble fundamentally despite a track record of good earnings.
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