Section 2 · Market Mechanics
Earnings Reports & Their Impact
Four times a year, every public company reveals how it actually did.
Earnings are the biggest scheduled catalyst on the calendar.
Every quarter, public companies report their revenue, profit, and guidance for the future. If results beat expectations, the stock usually gaps up. If they miss, it gaps down. The size of the move depends on how big the surprise is and how much the market expected it. Momentum traders watch the earnings calendar closely — the best gap-and-go setups often happen the morning after an earnings beat.
3 things to know
Earnings season runs for about 3 weeks after each quarter ends — January, April, July, October.
"Beating estimates" means reporting higher revenue or EPS than Wall Street analysts predicted.
Even strong earnings can cause a stock to drop if guidance (future outlook) disappoints.
Dive Deeper
Key vocabulary — tap each card
Practice
True or false?
Statement 1 of 4
A company can beat earnings estimates and still have its stock drop.
Did you know?
Meta (Facebook) lost $232 billion in market cap in a single day — February 3, 2022 — after missing earnings estimates. The largest single-day market cap loss in US history.