As an Investor, Do You Really Have To Listen to Quarterly Earnings Calls? | Global News Avenue

Quarterly earnings calls have long been one of Wall Street’s most boring rituals – executives spend hours talking about “executing our strategic plan” and “driving operational excellence” before answering analysts’ questions. Researchers have even looked into whether there’s a way for the CEO monologues and bad dad jokes company managers vainly come up with to break up the prevailing monotony. Everyone agrees on one thing: they’re boring.

So do you have to listen to them? While these quarterly forums often delve into mind-numbing technical details, modern tools make it easy to zero in on the critical information you need. Also, earnings calls have escaped their notorious dullness at times: Nvidia Corp.NVDA) Investors packed watch parties that rivaled sporting events, and more and more CEOs berated analysts in heated exchanges.

Here’s what you need to know about getting the most out of earnings calls without wasting a ton of time.

The Smart Way to Track Earnings Calls

You can now skip live calls entirely using these tools:

• Earnings Conference Call transcript: Many online services offer free transcripts shortly after the call ends. You can search the transcript for “guidance,” “outlook,” “challenge” or other topics you’re tracking.
• Expert analysis: For larger companies, the financial press often publishes key takeaways within hours, highlighting the most important revelations.

What’s really important in these calls?

The most telling part isn’t the raw data – they’re available in PDF form anyway – but how executives present it. You don’t need an accounting license to discover:

• Changes in key indicators: When a company suddenly deemphasizes a previously important performance measure or shifts to a new one, it often signals a problem. For example, in 2021, Meta Platforms Inc. (Mehta) shifts from discussing user growth metrics to measuring investments in the Metaverse. Then, in another turn in 2023, Meta stopped discussing Metaverse at all as losses reached tens of billions of dollars.
• Forward guidance: Listen to see if they narrow the range, become more conservative, or drop down to give specific predictions at all.
• Q&A session: This is usually where the most action is. Sharp or defensive reactions can reveal a company’s pressure points.
• strategic change: When the conversation turns to market changes, new initiatives, or competitive pressures, you need to read between the lines. You won’t hear “our core business is declining” – instead, executives will talk about “challenging market conditions” (i.e., declining sales) or “streamlining operations” (i.e., layoffs are coming).

How do earnings calls impact the market?

Earnings calls can trigger major market moves, often in unexpected ways. If executives express uncertainty during the Q&A process, a company may report strong numbers but see its stock price fall. At the same time, investors may overlook mediocre performance if management convincingly explains its strategy for addressing challenges.

Think about Nvidia’s recent earnings calls – they’ve become market events on par with major companies. Fed Announcements reported in the financial media can trigger hundreds of billions in stock value increases or decreases.

bottom line

While you don’t need to clear your calendar for every earnings call, these quarterly check-ins can provide valuable information about your investments. Good news? You can skip the live event but still get what matters with transcripts, media summaries and analyst reports.