Dick's Sporting Good Stock tumbled based on lower than expected earnings. The stock (NYSE: DKS) dropped 15.59% to $44.87. The executives on the earnings call were honest about the Q1 earnings, and gave guidance about Q2 and the full year.
That is a bad thing but if you look at it from a broader point of view it was bound to because of the low amount of revenue they were generating.
This was a result of the earnings call. The executives were honest about the lower than expected earnings, and this triggered the drop in the stock price.
Yes this is the truth, and when a company projects earnings that they cannot live up to, this is the result. The price of the asset becomes compromised.
Yep, I agree, the main issue for is, why are they making those projections if they cannot deliver? What do they expect after that?
It's a shame that they get actively penalized (by the drop i stock value) just from being honest. No wonder this business is filled with liars, honesty makes you poor.
When you expose yourself to the Markets by going public, you have to deliver for your shareholders, or they will flee. This is the reason for the drop. The people who had faith in the company lost it when they saw that they were wrong about their projections. It sucks, but it is the nature of the Market. They need to be realistic about their potential earnings, or they pay the price at the end of the quarter. It is a shame...
Publicly traded companies face much more regulations and scrutiny than private companies. The quarterlies are one of those things public companies must learn to accept. And they have to report numbers factually - some have made stuff up in the past and ended up paying a heavy price for it once they were caught.
This process helps keep the industry honest, and accountable to the shareholders. If shareholders did not have a quarterly reports, they would potentially holdonto positions that we fatal for the asset.
