Season’s Earnings...

Looking to make sense of how earnings reports play into stock price and how to be prepared for potential moves? [Image]( 12/14/2020 The Most Wonderful Time(s) of the Year ✔️ Better than the holidays? THIS season comes four times a year... ✔️ Why you should never trade based on ‘analyst expectations.’ ✔️ And [how you can shadow Tim Sykes in an all-day LIVE trading session...]( [Alternate text] ‘Tis the season … for earnings reports. Every quarter, publicly traded companies are obligated to release a report detailing their earnings. These reports are accessible to anyone, and they often act as a catalyst for stock price movement. That means opportunities for traders. From a swing trading standpoint, earnings season is better than any holiday. It comes four times a year — and stocks often follow similar patterns based on how earnings play out. Looking to make sense of how earnings reports play into stock price and how to be prepared for potential moves? Let’s get down to business. I’ll tell you exactly what earnings season is and how to prepare for the next one, coming in January 2021. Sponsored Ad [“Tim Sykes’ Gift to YOU”]( (His Last LIVE Trading Day of 2020!) [Image]( Tim Sykes has a gift for YOU!. If you want to be prepared for 2021, this could be the thing you’ve been waiting for. [Click here to see more >>]( What Is Earning Season? Every quarter, all publicly traded companies are legally obligated to announce their previous quarter's revenue and profits. These disclosures are submitted in a filing to the SEC known as a 10-Q. Many also provide an outlook for the upcoming quarter. A lot of companies also host earnings calls. During these calls, analysts, investors, and the press can hear from company leadership. The calls are often opened up for questions too. Companies typically file their 10-Q reports shortly after the end of the quarter. So there’s usually a flood of earnings announcements in the month or so following the end of the quarter — a period known as ‘earnings season.’ Traders love earnings season because big price swings can follow an earnings report. The press loves to report on earnings, too. But traders should be wary because there’s some misinformation out there about actual earnings versus ‘expectations.’ Analyst Expectations The news loves to talk about the analyst expectations. It’s common for the media to report on a ‘consensus’ of expected earnings. The problem? Their figures are based on a faulty model. For example, let’s look at one of the hottest stocks of the year — Tesla, Inc. (NASDAQ: TSLA). The next earnings date is scheduled for January 27, 2021. According to E-Trade, there are 16 analysts who have done an analysis of some sort on Tesla. And each has come up with a projection of Tesla’s earnings per share (EPS). Here’s the issue: - The lowest estimate is 46 cents per share - The highest estimate is $1.16 per share. That’s a big difference. Tesla has nearly one billion shares outstanding ... So those estimates actually vary by $700 million. The financial media tries to simplify these differing opinions. They provide an ‘analyst consensus.’ But it’s not a consensus. It’s just an average. Therein lies the problem. Some analysts might be more accurate than others, but the media gives them all equal weight. The media report might go something like this: ‘Tesla beats expectation consensus of 87 cents per share and reports 94 cents…’ But some analysts’ estimated earnings would be higher than the average. Some may have hit the nail on the head. But if you only read the news, you only get a portion of the story. The take-home message is that you can’t trust analysts or the expectation consensus. Nobody can predict the future — and the consensus is not what it seems. So now you’re probably wondering … ‘How should I approach potential earnings plays?’ Sponsored Ad [“Learn How to Make Short-term Trades]( [Based On Breaking News…”]( [Image]( Tim Sykes has spent years of his life learning the ins and outs of trading penny stocks. Now he spends his time teaching others how to trade in a chaotic market. Most people ignore penny stocks because they think they’re all scams. And… most of them are. But... If you see the con coming, you can prepare, get ready, and take advantage of it over and over again. Find out what’s possible with the right mentor on your side. [Apply for the Trading Challenge now...]( How to Prepare In my opinion, the best way to prepare for the next earning season is to learn from the past. If this coming January is your first earnings season, I want you to take notes. Don’t worry about trying to get it right. Just observe. Watch how the market reacts to the earnings beats and misses. It’s not always what you might think. You may be surprised by how many times a company can fall short on earnings but the stock goes up. It can happen in both directions too. A company might beat expectations — but then the price falls. Here’s the thing … The markets aren’t actually as concerned about the past as they are about the future. A big win last quarter doesn’t mean it will duplicate the earnings again next quarter. That leads to another part of the earnings report that you must pay attention to... Forward-Looking Guidance Years ago, I had a stock I was holding through an earnings call. It was the perfect trade — or so I thought. The company only had a few customers, but the orders were big and the company was growing. Over the summer, it signed a new contract with its biggest customer. On the earnings call, the revenue and profits beat expectations. I knew I was right... But then the CEO made another announcement. Its biggest customer — the one that just signed a new contract — wouldn’t be renewing after the current contract expired. The stock price tanked. I had to take the loss. It didn’t matter that the past earnings were great. It didn’t matter that the revenue for the next quarter was already rolling in. The past didn’t matter. All people heard was that there was a threat to future profits. As a trader, you need to learn from the past … but understand that markets move based on what people think will happen in the future. Sponsored Ad [“I’m Not Doing This Anymore…”]( [Image]( Paul Scolardi used to work a regular job… He spent his whole day helping others gain financial freedom... burning himself out in the process. Then… in 2013 he decided he was done. He started his journey to financial freedom and didn’t look back. And now? He wants to help YOU to learn from his path towards financial freedom. If you’re tired of grinding your life away… If you’ve had enough banging your head against the wall, figure it out… If you’re ready to look at yourself in the mirror and say - “I’m not doing this anymore”... [Click Here to Work With Paul >>]( ‘Tis the Season... Self-sufficient traders are in the business of reacting, not predicting. Don’t get hung up on what you think could or should happen, especially when it’s based on media hype. Sure, look at earnings expectations and the analyst consensus. But don’t make any final decisions based on them. In my opinion, the best way to learn how to trade during earnings season is to live through one. Watch and take notes. See how the prices react to the news, and take note of how the media reports on it. The best way to prepare for the future is to study the past. Seasons greetings, Paul Scolardi Editor, Swing Trade Millionaires P.S. Tim Sykes is hosting the FINAL all-day live trading day of 2020 tomorrow (December 16th). It’s the last chance for you to see exactly how Tim’s trading this volatility in real-time. This is the best way for you to get prepared for the new year… so it’s not something you want to miss. If you want to spend this Wednesday watching and learning from one of the best traders alive… [Click this link to see more]( Get Immediate Access (Free of Charge) Click to read these free reports and automatically sign up for daily research and other important offers. You can unsubscribe at any time. 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