Gilead reports great earnings and the stock goes down right away -- Why?
Best Answer
4085 points
EthanR answered 10 months ago …
Dave, I haven't checked the chart, but perhaps the stock had run up on price in the days leading up to the earnings report, and so it was buy on the rumor, sell on the news? Many times stocks become short term overbought before the earnings announcement, so nobody wants to buy the stock, even though the earnings were good.
Another possibility is if they announced something else at the same time that was negative, such as, "we had a great quarter, but going forward we think our growth may be slower, or our margins may be lower".
Answers
379 points
dustbusterz answered 10 months ago …
another possible situation is that traders were expecting an better than what they heard report. sometimes traders are hoping for great performance, they get good and become disappointed,that causes a drop in price.
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3963 points
MNSL answered 10 months ago …
Generally some traders go with the crowd irrespective of good stock or bad stock. Some stocks do not represent correct value in the market. Some bad stocks with poor fundamentals have gone up. Some traders can not identify quality stocks due to lack of their knowledge. They can not think about future and future earrings. They take decision on the current performance.
We must also not forget that there are different types of players in the market. Some companies can make profit due to change of currency trends in the short run. If they can not generate demand for there products and services their growth will slow and sometimes can become bankrupt in the future.
Some companies can make less profit or loss in the current financial year. But they will make profits and strong growth in the next 05 years. For example Sanderson Chicken farms share price went up from $20 low to around $38 now. Some intelligent investors have indentified huge growth potential in this company. However, if we are going to invest in a company for the long run we must do thorough research.
There are other types of companies that they will make some profits now. But they will not have demand for their product and services in the next 03 to 05 years and continually they will make loss in the next 03 to 05 years. Those companies will underperform in the future.
Some companies in the following sectors could become bankrupt and growth will slow down drastically during next 03 years:
Technology sector including telecom sector and software sector
Electronic, tyre, textile, leather and auto sector
Commodity sector- Growth will slow down in some areas such as energy including oil, grain, coal, gold and industrial metal sector
Property developing and housing sector
Financial sector
Travel and tourism
