Old news. GE has been in free fall for a year now (down almost 50% over the last year and worst djia performer).
Last week a warning came out and it fell then. It was pretty well anticipated that news relating to the insurance business was coming out this week. I guess the news is about inline with what was expected.
Generally, by the time news like this hits the papers, everybody already knows about it, unless it is some secretive expose. This wasnt a secret.
Confounding news. Earnings were good; this news is negative.
> The shares rose less than 1 percent to $16.97 ahead of regular trading in New York, erasing a gain of as much as 5.8 percent that followed the announcement of the company’s fourth-quarter earnings.
The company's estimates and outside analyst's estimates are two different things. When they agree then I think the price gets reflected quickly, when they disagree it opens it up for more volatility.
Maybe the news was already baked in? Seems like a common underfunded long term liability issue that could be forseen in their financial statements. (Any company with long dated fixed liabilities and unrealistic investment return assumptions can fall into this)
40% of the time, options prices move in the opposite direction of the earnings surprise.
For those who are skeptical, this is not magic. The reasons for it are all the reasons you might expect: the biggest investors may not agree with the market consensus, the analyst consensus doesn't weight analysts by credibility so the "credible" analysts may not match consensus and so on.
Workday beated estimates by over 50%, yet shares fell.
I can give a lot more examples...
Lots of investors also sell when earnings beat estimates because they think they'll be selling high, etc. Point is there are tons of factors and it is way too simplistic to say beating earnings = price increase on that day.
There are two estimates you need to consider. The official estimate and the 'secret' estimate that investors really think you should beat. Although most people focus on the first one, it's only the second one that really counts.
Point is there are tons of factors and it is way too simplistic to say beating earnings = price increase on that day.
This really depends on how accurate analyst estimates have been in the recent past. Consistently beating estimates will produce less gains over time. Similarly, consistently missing earnings will eventually cause less price damage over the mid run (of course it will probably produce bankruptcy in the long run). Confounding this picture in this case is that the market is trying to price a bunch of spinoffs which have been announced or rumored.
Last week a warning came out and it fell then. It was pretty well anticipated that news relating to the insurance business was coming out this week. I guess the news is about inline with what was expected.
Generally, by the time news like this hits the papers, everybody already knows about it, unless it is some secretive expose. This wasnt a secret.