Question about earnings report vs change in stock price

Discussion in 'Trading' started by Cyber0066, Jul 27, 2006.

  1. How come when some companies release their earnings report saying "profit up ___" their stock price jumps up the next day while other companies don't have their stock price move considerably.

    Just a quick exam I can think of off the top of my head, ATI and Tim Hortons.

    Tim Hortons Q2 profit up 25%. I thought this is considered good news, but it looks like the market doesn't. In fact, THI dropped a bit today.

    On the other hand, Apple Rises 48 Percent and their stock JUMPS almost $10 a share the next day.

    Can anyone enlighten me please?
  2. a very basic answer would be that it is not about the specific numbers that are reported, but more about the expectations of the market. if company x is expected to be up 50%, but they report an increase of 25% then a clear divergence of what was supposed to happen and what did happen takes place, and market participants react accordingly.

    also..."buy the rumor, sell the news" is applicable here as well.