During Results Seasons – 1 业绩期的股价波动 – 1
By King Leung
The results seasons just ended in March. Investors can eventually take a breather to spare sometime for spending their gains from the market. If unfortunately you didn’t earn after the results, you might need to re-balance your portfolio.
The share prices fluctuate during the results period and it is not easy to capture the gain right after the result announced. Many of us concerned much about the price fluctuations, the below shows some common reasons for the price fluctuations, especially on the down side.
Behind market expectation or management guidance cannot be delivered
It is always been said, buying stock is buying the expectation of the future of the company. Hence it is easy to understand if investors expect the company to earn, say RMB 2 billions but ends up the company only makes RMB 1.7 billions in that year, or 15% less than the markets expectations, the price would drop. This is not directly related to how much it earns, or how fast the growth is, because all of this has been expected by the market.
The miss in expectations would mean the company is not worth the market value i.e. its current share price, as such value is based on the expected earning power.
Another similar example is that, the management cannot deliver the target set, or cannot carry out the business plan as scheduled. For example, if the sales target of the year of an mobile phone maker is 3 million sets, if the actual sales falls far below the target, the market will response similarly. Actually the actual sales are subjected to factors that are out of the management’s control. As to manage the market expectation and enhance transparency, some of the companies announce monthly quarterly sales figures.
On the business plan such as expansion of production capacity, lacked behind the schedule would also cause negative impact to the share prices. This is because such delay limited the supply to meet the market demand, and hence limited the growth of profit to the company.
To be continued