Valentine’s Day week serves as revelation period for stocks
One of the most important weeks of the year is here. For lovers and investors alike, this week has a significant importance on how the rest of 2019 will go.
While stocks don’t have a Valentine’s Day, they do have earnings season, which you can think of as cuffing season for stock traders. It’s one of the four weeks a year where an investor is glued to his or her computer in anticipation of a company’s quarterly report. For investors, quarterly reports show the most recent performance of a company for the previous quarter. This is important because investors can gauge the future performance of the company based on the reported data or what the CEO and other executives say on the call.
Earnings season causes stocks to move, yet they do not always move based on data alone. Instead, stocks tend to trade based on expectations instead. For instance, Snapchat (SNAP) rose over 26 percent in one day after reporting its earnings were better than expected. Snapchat’s Earnings Per Share (EPS) is -$0.04, meaning that SNAP has a loss of four cents for every share that is outstanding or available. SNAP has over 800 million shares outstanding, so the four cent loss per share is much bigger than it seems. On the other hand, investors thought SNAP would lose nine cents a share instead of four cents. Thus, the results were better than expected, causing the stock price to rise.
On the other hand, if a stock is doing well and making a sizable profit, but reports lower gains than expected, the stock could very well decline. For example, if someone expects their significant other to get them AirPods and instead their significant other gives them a $10 gift card to Tim Horton’s, they’d be happy with the gift card, but it’s not as good as having AirPods.
For SIMM, we are actively analyzing our holdings as they report earnings. Once all those companies report earnings, we will begin thinking about the direction of our portfolio heading into the rest of 2019.
By Adam Talmadge, Staff Writer
talmadaj14@bonaventure.edu
