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What is the 'typuc
Additional Information:
(Ooops, typo!) What is the 'typical' standard behavior of the price of a stock when earnings are announced, or in general, when there's important news from the company? In a cursory check I couldn't correlate good (bad) news/earnings with price.
Any help?
Best Answer
4085 points
EthanR answered one year ago …
It varies so much, I don't think there is a typical behavior. But I will give you some observations of things that I notice all the time. If a stock has run up a lot in anticipation of a good earnings report, it will then sell off on the news more often than not, especially if the earnings only meet or are less than what analysts were looking for with their numbers. But if a stock is really oversold, any decent news, including a bad report that is still better than analyst consensus, will drive the price back up.
Recent examples of this were seen with the home builders. Those stocks were trashed so badly, that even the worst earnings reports drove the stocks up, at least temporarily.
Important news from the company, assuming it is positive, will usually have a positive effect upon the stock price. Some examples are: Increasing the dividend, raising their guidance for the next quarter or year, or the development of a new product or service. But if the news is bad, then the stock usually gets crushed. Examples include cutting the dividend, the CEO or CFO leaving suddenly, lowering forward guidance, etc.
Another factor which seems to drive stock prices higher or lower in the short term is an analyst upgrade or downgrade. Hope this helps.
