It appears regardless of what one owns that if they dont beat top and bottom plus beat forward guidance by a substantial amount they will be taken down in this market. But I wonder if computerised algorithms(and to a certain extent not analysts)have anything to do with this? Anyone have any knowledge on this subject?
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I have a hard time understanding the point of analysts sometimes. A company posts record revenue with growing sales but they don’t forecast the numbers that Joe working for ABC Investments ‘thinks’ they should make next quarter so people freak out? What?
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When you have a stock valued at 15-20 times sales with no earnings, a substantial share of the current value is based on multi-year earning projects. A very mild shortfall can imply a substantially lower current valuation. It’s not that the analyst “thinks” earnings should be higher. They don’t pull price targets out of their rear ends, they have models based on projections. If they have to adjust the projections downward even slightly it can have large effect.
Let’s say - oversimplifying this drastically - that you are projecting 10 years out at 60% growth. 1.6^10 is 110. A single basis point lower, 1.59^10, is 103. If that was 1:1 correlated with the current valuation, that 1% delta results in a 6% lower current value.
It’s why growth stocks are volatile and why things like 10% upside surprises like TWLO produce disproportionate 35% moves up.
Further, when a company beats multiple quarters in a row, analysts will try to adjust (or people will complain about how they are out of touch because their PTs aren’t keeping up, if that sounds familiar). So even “meeting” guidance after a history of beats will lead to downward revisions in projections and post-earning drops.
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The market has been this way for 20 years at least. If you’re not beating and raising as a high-growth company, some people will sell not wanting to be bag-holders when the party’s [eventually] over.
E.g. Last Q Talend was in the 60s now it’s $40.
It’s better to be early in a stock and early out of a stock, than late in and late out…
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Well TDT down about 17 bucks after hours and briefly going over the figures(admittedly very briefly) what the hell am I missing here? And that’s why I mentioned algorithms, something just is not adding up.
Discl. I don’t own them… but at this rate will be looking to see where this opens tomorrow.
Do you mean TTD (not TDT)? SQ down hard. TLND. TTD. It is a bit baffling to me.
Only reason I can figure out why TTD is that I added 1% to the position today.
Seriously, there is nothing wrong with the numbers or guidance. Guidance was raised. If the SA headline was right they “beat” handily on EPS. And the quarter grew at 50%. The same as last year.
Next quarter’s guidance implies a minimum of 43% growth and the prior Q4 grew at 42%.
I don’t see anything wrong at all.
Will listen to the call.
A.J.
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I was unable to resist adding to my TTD position with the after-hours price, so I bought a few more shares at $107.65 after having bought some shares earlier in the day today at about $128. TTD is my 3rd largest position, behind NVDA and MDB.
volfan84
long TTD
I wonder if computerised algorithms(and to a certain extent not analysts)have anything to do with this?
I suspect there are contrarians out there who always bet against the news. Possibly they believe that any good news will be followed in a day or two by someone asking at least how long that can go on and maybe criticizing the info presented. Hence, they anticipate a quick reversal.
Many must beat the market to survive. You can’t do that by following the herd. The contrarian approach is part of the winning strategy for some.
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Yes sorry…TTD, trade desk…
It does seem the market has been very erratic after companies reported earnings. I noticed this with SPLK over the last year. Beat and raise, the stock goes up after hours. Next quarter they do the save thing and the stock falls.
But the company continued to grow so the stock price went up overall.
If there are algorithms, I don’t see what sense they make. There is no rhyme or reason nor do they indicate what will happen with the stock price going forward.
Earnings miss ir lowering forecast I get that. But not when it’s a beat.
What’s worse is when analysts explain it away with something said during the con call when the drop occurred before the con call and when the earnings release occurred. All we know right now is in the press release.
What’s driving this? Couldn’t tell you. All I know is it’s time to start looking at it as a gift. Because it clearly seems to be happening on a more frequent basis.
And then we all get to sit around and come up with reasons why the market didn’t like it.
There also seems to be more a correlation between the next opening day. It used to be after hours didn’t mean anything. But now it’s certain if after hours it falls it will also open the next day down.
I know in that case, after hours has become more available to individual investors.
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What’s worse is when analysts explain it away with something said during the con call when the drop occurred before the con call and when the earnings release occurred. All we know right now is in the press release.
People who work in the company or even suppliers and customers know if things are going well for their part of the business–this week compared to last week, last quarter, last year. Hence, word of a company doing well (or major slow downs) leaks out long before they get reported at the end of the quarter from headquarters. That explains a tendency for stocks to drift in one direction or the other leading into earnings reports. Analysts may know how to tap into this info. But then do the actual numbers meet expectations or not?