Stock Price Reaction Unpredictable when it Reports Earnings

Tom Gentile

Posted in

By: Tom Gentile
April 18th, 2023

3 mins read

Have you seen this before?

A stock you are invested in, or track reports its earnings for the latest quarter.  It reports their earnings per share (EPS) is $1.02.  The expectations were for an eps of $1.00.  They also report their revenue for the quarter came in at $1 Billion.  Their revenue expectations were 1.01 billion.

The company beats on their earnings expectations yet the stock drop 1.25% on the announcement.

And then another company you invest in or track reports eps of $.86 versus expectations of $0.89 and yet they are up 1% after the earnings.  They also report they expect increased sales in the next two quarters.

Wait. What?  One company beat their earnings expectations and drops, yet the other misses yet pops higher.

Should I have asked the questions ‘How Many Times Have You Seen This Before?’ and really ask it as a rhetorical question?

What a Company Says Along WITH Their Earnings can Affect Share Price

Take a look at Netflix, Inc. (NFLX).  Here is the info from for their eps & revenue numbers for today:

Provided by
Provided by

Here are the numbers from United Airlines (UAL) for today:

Provided by
Provided by

Both beat on their eps numbers, (UAL loss less per share than expected – considered a beat) and both fell short on their revenue expectations.

Now look at what is going on with each after hours according to the website.

NFLX After Hours 2023-04-18
NFLX After Hours 2023-04-18
UAL After Hours 2023-04-18
UAL After Hours 2023-04-18

Wait. What?  One company beat their earnings expectations and drops, yet the other misses yet pops higher.

Wait Until After Earnings are Reported Before Considering an Options Trade

If you didn’t quite believe this was possible, the above info and images shows that yes, it is true that can and at times does happen.

It is this unpredictability that speaks to why we educate that without options education and MORE SPECIFICALLY get options education around earnings reports that one stays away from having an option trade on whose expiration is past the eps announcement date/time.

There is the whole aspect of options suffering a volatility crush (where implied volatility, or IV, that is a component used in pricing options drops and reduces the value/price of the option).

Regardless if the eps and revenue numbers are good or bad and regardless of price action, the IV crush alone can devalue the option and cause a loss for one’s option trade.

Best to stand aside from an option trade whose expiration is past the eps date/time.

Let the numbers come out and then consider an options trade.  We will discuss an option strategy after an eps report in a future educational article.

App: Toms Option Tools

Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.


Stock and options trading has large potential rewards, but also large potential risk.

You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.

This is neither an offer to buy/sell/ or recommend a particular stock or option.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.

No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Disclaimer of Warranties and Liabilities Tom Gentile and TomsTradingRoom, LLC including employees, consultants, and editors (“Publisher”) cannot and do not warrant the completeness or accuracy of the content found in our areas, or its usefulness for any particular purpose.

Tom Gentile and TomsTradingRoom, LLC also make no promises that our content or the service itself will be delivered to you uninterrupted, timely, secure, or error-free. Under no circumstances will Tom Gentile and TomsTradingRoom, LLC be liable for direct, indirect, incidental, or any other type of damages resulting from your use or downloading of any content on our site.

This includes, but is in no way limited to, loss or injury caused in whole or in part by our negligence or by anything beyond our control in creating or delivering any portion of Tom Gentile and TomsTradingRoom, LLC.

You are agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that Tom Gentile and TomsTradingRoom, LLC will not be liable for any I, investment decision made, or action taken by you, or others based upon reliance on news, information, or any other material published by Tom Gentile and TomsTradingRoom, LLC.

Tom Gentile and TomsTradingRoom, LLC relies on various sources of information that we believe to be accurate and reliable. However, we make no claims or representations as to the accuracy, completeness, or truth of any material contained on our site.

Tom Gentile and TomsTradingRoom, LLC are educational portals, providing content for educational and informational purposes only. Neither Tom Gentile nor TomsTradingRoom, LLC are a broker/dealer. Investors need a broker to trade stocks and options and must meet certain requirements. All securities, futures, and investments data and ideas are offered to self-directed investors. All prices in USD unless noted otherwise.

A full disclaimer can be found here:

Sign Up Now for Free Education!