Headline after headline say that companies “failed” and/or didn’t hit “targets”, but when you look at the numbers, the company made profits, sometimes in the millions to billions, it just wasn’t “enough”.
Is this greed? Why is it not good enough to make a profit?
In: Economics
This is about stock price. Investors buy stocks and expect them to be worth some amount and for the company to earn such and such amount at that price point. Or expressed another way the company earnings ratio to stock price is expected to be some value for a given company. Now all is well and good if the company actually keeps earning that much, but if they earn less or more than expected, then that implies the stock price is off target and likely there will be a quick correction on the market. The value of the company will change according to it meeting or not meeting the expectations on its earnings.
Does it mean the company is doing badly if it earns less than expected? From a certain point of view. But mostly it simply means the investors overpaid for their stock and are now shit out of luck.
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