As an investor, knowing all there is to know about the stock market is crucial. However, this might prove to be a challenge if you are new to it.
Our site provides reputable news on the stock market. We give you up-to-date information on earnings dates, such as the upcoming Google earnings date and the Amazon earnings date. We also give you a comprehensible, expert analysis of financial results. With our assistance, understanding the stock market becomes more straightforward.
What is an earning call?
One of the most important things to learn about the stock market is the earnings call. The earnings call is a conference call where publicly traded companies discuss their financial results for the quarter. The earnings call usually comes after the official press release, where the company presents a summary of its results.
Many investors plan trades around the date of an earnings call.
Structure of the earnings call
The earnings call comes after frequent announcements days or weeks before the event to capture the attention of investors, business journalists, and analysts.
The call itself begins with a safe harbor statement. At this point, the company warns the listeners that the discussion could contain forward-looking statements; hence the estimates given could differ from the results. In this way, the company avoids liability if the comments during the call and the actual results don’t match.
After the safe harbor statements, the company executives discuss the results. The call differs from the press release as the executives detail a quarterly or annual report. They give reasons for the decline or increase in revenue, changes within the company, plans for the future, and how it could affect the investors. They also warn investors about pending lawsuits and the future of their shares.
A Q&A session follows the presentation. Here, investors, analysts, and business journalists get to ask questions on the presentation given. This session is vital as it provides more information on a company’s performance, thus helping investors make informed decisions regarding their stock. The answers given to these questions could either work for or against the company.
A company could refuse to answer the questions the listeners ask.
Disadvantages of the earnings call
While this conference call presents many benefits to investors and analysts, it can come with disadvantages. For instance, the earnings call demands much attention and resources, disrupting normal business operations.
Moreover, while the Q&A session could help establish trust between a company and its investors, a negative answer could present the company in a negative light, which could have dire consequences on share value. In addition, refusal to answer a question could make investors not trust the company.
Whether you are an analyst or an investor, watching the earnings call will help you make better choices. However, always make sure to prepare for a call so that it is easier to follow.
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