This earnings season has been brutal: 27 out of 43 earnings beats still ended with stocks falling

It's been a BRUTAL earnings season 💀
byu/Anoncry66 inwallstreetbets

Here is a number that tells you how ugly this earnings season has been. A review of 56 earnings reports from 29 companies found that 43 companies beat at least one earnings, revenue or company guidance measure. Yet 27 of those 43 stocks still fell after reporting. That’s roughly 63%. In other words, beating estimates was more likely to get you a red trading day than a green one.

And some of the reactions have been ridiculous. Reddit beat both earnings and revenue estimates, yet its stock plunged 29.3% after management warned about slowing user growth and weaker search traffic. Meta beat earnings expectations but still dropped 7%. Johnson & Johnson fell 5.7%, while Microsoft lost 4.4% after its earnings report in an earlier quarter tracked in the same dataset.

The pattern gets even uglier when you look at forward guidance. All 12 reports in the review that included guidance below Wall Street expectations or a cut ended with the stock falling. Eleven of those 12 companies had actually beaten estimates for the quarter they just reported.

Imagine running a business, beating Wall Street’s earnings expectations, and watching investors dump your stock because they don’t like what you said about next quarter. That’s the market right now. Yesterday’s results barely matter if investors think tomorrow’s numbers won’t be good enough.

At this point, companies aren’t just being judged on how much money they made. They’re being judged on what they promise to make next, how much they have to spend to get there, and whether investors believe the whole thing is worth the price. One earnings beat isn’t buying anyone much forgiveness.