The enigma of quarterly results: why is the market unpredictable?

Every three months, publicly traded companies must report to the market. These quarterly presentations reveal their financial health: liquidity levels, debt, profits, and growth. It is undoubtedly the moment of greatest uncertainty for investors, as everyone wonders where the stock price will go.

A stock's value moves based on future expectations. Before its release, analysts have already drawn up their forecasts for earnings per share (EPS), sales growth, or user acquisition. Logic tells us that if the company exceeds these forecasts, the stock should rise, and vice versa. However, the reality of the stock market is much more complex: it is often impossible to predict the market's reaction on the day of the results.

This is where the classic concept of "buy the rumor, sell the news" comes into play. When investors anticipate good results, they buy the stock weeks in advance; Once the news is confirmed, they take advantage of the situation to collect profits, causing an unexpected drop in price. A star stock with strong results is often punished more than a mediocre company from which only fair results are expected. Furthermore, what is said in the presentation is vital. However positive the past numbers may be, if the company announces a slowdown in future growth (known as...) guidance), the market will punish the stock. In the end, the stock market always cares more about tomorrow than yesterday.

Earnings season is about to begin, and the market is preparing for a new wave of volatility. Given this scenario, always remember that in the long run, the stock's value will ultimately reflect the company's ability to generate sustained profits.