A couple of observations: 1) While beating estimates, revenue slightly declined from last year. 2) The company reiterated guidance @ $3.63 to $3.73 while analysts expect $3.67. This leaves a $0.04 chance earnings will not meet analyst expectations. Overall the company met analyst expectations, not beat them. Perhaps investors were looking for a beat and sold off when they didn't get it. Have you listened to the conference call? Usually some good dirt in there.
kassz, your observation is 100% correct. i agree with what you say and your possible reasoning. i think one thing we both can agree on is that the stock price fell. in FSLR case i understand why, it is cut and dry. but in this case it is not as clear. we can guess at it, but it is not cut and dry. thanks for the insight, but personally i would not think that the stock would sell off over 5% especially on the nice uptrend it was embarking on. in this economic enviornment that company killed it. they met all their expectations. now, clearly, the shareholders felt different and i was caught in the middle.
I agree the sell off seems excessive. My theory is the run up before earnings occured under the assumption of a beat, and when that beat didn't happen, investors took the price down to levels it should be at for simply meeting expectations. In any case, unfortunately you got burned on this one. In your strategy, do you consider the movement of price before earnings are reported? i.e. Company X has risen 8% before earnings, therefore even if Company X beats estimates the price will not jump?
kassz, again i agree, but only to an extent. what i have found is that the past price movement has little relation to the earnings price jump. i.e. ibm spwra wmt to name a few. they all went down leading up to the announcement. also myl is an example of going up and when the earnings hit a "triple play" the stock does go up with a strong move still. a matter of fact, what i have found is that i need to purchase the stock at the end of the day. in general, and, this is very in general, i have noticed the stock usually sells off an hour or so before end of day on an earnings day. i guess this is because a lot of day traders do not want to deal with that type of play. it saves me a ton of money (hundreds of dollars grabbing it at the very end of the day) one thing i look at when choosing the play is that the stock is not overbought, because as you have said, if it does miss, the disappointment could cause a major price move. in general, if you look at a chart you can guess what the move will be. usually goes up one level, maybe two. i was actually in BWLD. but i sold at 25. missed the extra $7. my plays today were ATHN DECK SNDA RSG ENDP lets see how they work out
It's important to realize that one miss will potentially wipe your aggregate profits. They sell off at the end of the day prior to earnings for a reason. Previous poster mentioned management outlook/guidance, which has more weight than anything as far as the market is concerned. Placing a bet on how management will handle guidance is often just that.
yes. plant a cheap bomb. when stock passes through it, the bomb explodes, and you will be happy to collect your treasure. PM me to get the cheap...
too much labor and opinion in what you do. you get paid not for how much work but how many times you are right. not the same thing. what makes you think that the other people are not doing what you are doing?
A couple other things to consider: 1. The call itself... this usually comes after the announcement. Even if it's a "triple play" in the announcement, the officers can often say something in the call that can drive the stock the other way. So, if you're holding it thru the call, you want to listen in or at least monitor price action in the stock while the call is going on. 2. Earnings whispers... these are numbers that are supposedly floating around the street by people "in the know". Even if it beats the analyst number, if the "whisper number" is higher and it didn't meet that, the stock may dive.
All the below is absolutely nothing more than just my opinion. Above all, news is news is news - - - - good or bad, it's still just news. 1st: If you continue to rely on company's hitting a triple play for you to profit from, be prepared to take some great big hits........actually, trading earnings is a high risk game regardless. 2nd: The old market axiom (and it's inverse) still holds true......."Buy the rumor, sell the news." If price has increased a few points or more into the news, expect that the rumor was being bought, and vise versa. Plan for the news to get sold. The closer to resistance, the higher the probability news will be sold. Inverse that thinking if price is near support prior to the news. 3rd: Assuming you are in an earnings trade for a trade, not an investment, plan to fade the news. IOW, plan to trade opposite of the initial reaction to the news - give it a few minutes or more for best entry. 4th: Maybe this should be #1, but you should always consider what the overall market's reaction has been with recent news. . . . . . . . has news (good or bad) been bought - or sold? Be biased the same way as recent market reaction to news, regardless of what YOUR opinion is of the actual news. Steve
a big wad of money with an unproven strategy and an inexperienced trader. i mean no real offense, but tread very carefully.