If you've been around the block and traded some stonks you may have heard of
this thing called earnings season.
Wabbit season, duck season, fire!
no it's not wabbit season nor duck season it's earnings season. Earning
seasons are exciting times that happen four times a year in which publicly
traded companies will release their financial results, basically informing
their investors how much money they've made in the last quarter. Depending on
the results these earnings reports can create some volatile moves in some of
our favorite stocks whether it's ripping to the upside or dumping to a bottomless
pit in this video i'll be going over exactly what is earning season and why
you should care as a trader or investor and how to analyze some key metrics from
the financial results so you don't have to read through 10 pages of 10q reports
and most importantly i'll also share with you some important trading tips for
you during these volatile times so if you're excited to learn about earning
seasons to increase your earnings and my terrible bad jokes scattered throughout
the video remember to gently destroy the like button all the proceeds from you
clicking the like button will go towards the chosen charity of the month the bag
holder foundation for my ex-husband mike beckholder that starts from the very
beginning what is earning season earning seasons occur four times a year it's a
period of time when publicly traded companies are required to report to
their investors how much money the company has made in the last quarter
this is important because wall street analysts rely on these earnings results
to determine the value of a stock and many institutional and retail investors
use these metrics and the sentiment to determine whether they want to buy the
stock or just get a goat because this baby is taking on huge losses and is not
making any more money for the company nor the investors like we mentioned
earlier earning seasons occur four times a year each lasting around six weeks yes
your favorite stocks like tesla amd netflix and even our best friends
gamestop and amc will do these quarterly earnings presentations every three
months so don't worry if you just missed the last one you will still have many
more chances to yolo i mean to trade or invest in these stocks during this year
and remember per regulations these publicly traded companies are required
to report their financials update the investors on how they're doing and any
upcoming events or drastic development within the business individual companies
earnings dates are announced usually a few weeks before the actual earnings
report and the conference calls are hosted monday to friday during regular
trading weeks the actual times of the report are either before the market
opens first thing in the morning or right after the close most companies at
least the big tech names like google apple amazon or apple release their
earnings right after the bell from 4 to 4 30 pm eastern time because they don't
want to give traders too much of a break before the next yolo am i right what
usually happens on the day of the earnings report is companies will first
of all release a key financial metrics basically a quick rundown of how they
did in the last quarter they'll post their revenue figures as well as their
earnings per share and right after the key metrics are announced usually this
is when the company's stocks will start fluctuating after hours or pre-market
many times as the figures are exceeding the wall street expectations you can see
the stock rip up after hours like this amazon chart right here you can see the
stock took off like a rocket and ran up 300 to 400 per share after hours on the
other hand if the company releases disappointing financial results like
this one well you can see the stock can still rip
too no not rip to the upside like amazon i'm
talking about rip rip don't worry we'll dive into the details
of what these key metrics mean and how to analyze them as a trader or investor
in a little bit following the initial financial results like earnings per
share and revenue there will be a more in-depth conference call with a ceo cfo
and coos that's where they'll dive into the details of the business such as
balance sheets new product releases consumer trends or even competition
concerns now i know if you're watching this video you most likely don't have
the time to read the entire 10 pages of the 10k on the sec website so that's why
we're going to be talking about some key figures most investors and wall street
used to analyze whether a stock is a buy hold or get out all right so the first
key metric is earnings per share abbreviated as eps earnings per share is
calculated by taking the company's net profit divided by the number of
outstanding common stock so for example if my ex-husband's publicly traded
company bagholder trading limited reported that they made one thousand
dollars in profit in the last quarter and they also have one thousand total
stock shares available then we take one thousand dollars in
profit divided that by one thousand shares to get an eps of one dollar per
share vice versa if back holder trading limited reported that they didn't make
any money instead they have a loss of one thousand dollars instead the eps
will be negative one dollar per share which is a big loss the moral of the
story here is kids don't backhold like my ex-husband the next key metric to
look at from the earnings report is revenue basically revenue is the amount
of money the company makes from providing its services or products to
consumers even though having a very positive revenue does not mean a company
is highly profitable because none of the costs are considered investors still
value this revenue metric very much because a growing revenue is the number
one driving factor that could eventually lead to higher
profitability essentially if a company can have increasing revenue year over
year this shows growth to their investors this is especially important
in tech companies or growth stocks in general since wall street follow the
statement if you're not growing then you are in the process of dying that's why
amd stock soared after hours after the q4 earnings report on february 1st 2022
not only did they announce they have an eps of 92 cents per share they also have
a very bullish 49 year-over-year revenue growth another
great example is google they also released their q4 earnings on the same
day as amd google also had some blowout numbers as
well they had earnings of 30.69 per share and 32.4 percent
year-over-year revenue growth in both of these examples amd and google they also
had another very bullish factor they issued upside guidance which is the
third key metric to look out for when reading a company's earnings reports in
the simplest terms a company's guidance is how much money they are expected to
make in the near future and whether they are projecting their revenue to grow
even more guidance is often discussed in depth
during the actual conference calls after the initial financial metrics are
released remember the stock market is forward thinking well it's great and
reassuring for investors to know that companies like amd or google have made a
lot of money in the past quarter investors care even more about whether
they are expecting to make even more profit in the future so both of these
stocks we just talked about did not disappoint they both issued upside
guidance and forecast even more growth in 2022
however for stocks like paypal and facebook or shall we call it meta these
companies are projecting a slower growth and subsequently making less money in
the rest of 2022 and that's why these stocks dumped after hours and continued
lower for many days later remember these key metrics in earnings reports the
earnings per share revenue growth and guidance are really just the surface of
the story understanding these figures are enough
for short term day trading or even swing trading however if you are a long-term
investor i would highly recommend you to read the entire earnings transcript or
tune into the earnings calls live alright so now that we understand the
three key metrics to look at how exactly can we both day traders and swing
traders take advantage of these reigning lamborghini opportunities that happen
four times a year the first thing for us traders is to look for the anticipation
move into earnings stocks that have a big following or just enough weight to
move the indices often can make huge moves up or down into the earnings event
for example stocks like tesla apple amd are some of the most anticipated stocks
that traders love to trade generally speaking if the sentiment and the market
environment is expecting a company to release very positive earnings the stock
could rip up and run into earnings however this is obviously not applicable
to all the stocks in a fearful market condition such as during the pandemic or
high inflation and rising interest rate environment we're in right now
regardless of whether there's any hype for the earnings many stocks are still
selling off like a bottomless pit so just be very careful and take into
consideration all the factors we just talked about the second tip i have for
you and i think this is a very important one especially if you are a new trader
never i repeat never hold your short term trading positions into earnings
this is a true 50 50 gamble a stock can beat on earnings and still tank it could
also miss on earnings and take off like a rocket i've actually had personal
experiences holding these trading positions into earnings calls in my
first year of trading i was new and very naive and i really wanted that one home
run trade and let me just tell you the profits from these gamble trades are
very very small in comparison to the big losses the risk was just not worth it
unless you only have a very small partial position or you're hedged with
options after so many years of trial and error honestly my preferred way to trade
during earning seasons is to trade the gap ups or the gap downs the next day
after the full earnings reports have been released which is my third tip for
all of you traders take the time to fully analyze the after hours action on
some of these stocks that made huge moves and use a time to observe how
similar industry stocks react after their earnings by waiting until the next
day you now have the time to truly analyze and read the conference called
transcripts and get a full understanding of all the three metrics we talked about
eps revenue and guidance and trade the pre-market moves the next day
accordingly if you are looking for more in-depth trading strategies to trade
these overnight gap ups or gap downs after earnings reports then feel free to
check out the humble trader academy on my website i talk about trading earnings
in even more detail in the program these are some very exciting times that lead
to a lot of volatility for us traders to capture some decent profits and hey
guess what even if you had just missed this one around there'll always be
another earnings season in three months thank you guys so much for watching as
always i'm the humble trader and i will see you guys next time
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