Should You Buy Stock Before an Earnings Call? Here’s What You Need to Know | Global News Avenue

Through the direct communication between the management company and investors and analysts, the income telephone provides important insights for the financial health of the public trading company, performance indicators and future prospects. These quarterly updates are not just printed Financial statement And can create huge changes in stock price, which brings seductive opportunities to traders.

However, before these companies’ activities, stocks need to be carefully considered and understand the risks involved.

Transaction before income call: understand the appeal

Investors sometimes Income phone If they believe the company will surpass expectations. In other words, their actions are expected to have a large number of income reports that may increase the stock price. This decision usually comes from Market indicator Or analysts’ predictions show that the company’s sales or profits have increased more than expected. For some people, because of the market’s expectations for positive news, this is a strategic attempt.

However, because this method is trying to predict the future, it will also bring risks: if the company misses (even satisfying) the target or disappointment prediction, the price of the stock may suddenly fall.

According to a study in November 2024 Behavior financing magazine,,,,, Retail investor From the online discount broker Robin Before the income announcement, it usually increases its shareholding, especially for well -known companies that have received the attention of the media. The researchers concluded: “We found that powerful evidence shows that around the income announcement, the behavior of Robin investors is mainly driven by noise transactions caused by attention.”

Other studies have also found that this trading model is mainly driven by short -term, attention -based decision -making, not knowledge analysis or strategic timing.

The advantages of buying stocks before income calls

The decision to purchase stocks before the revenue conference has obvious advantages and disadvantages.

In terms of rising, those who are active in the correct expectations Income surprise It may benefit from the momentum and instant price rise before the announcement, which may follow the results that exceed the expected results.

However, the study found that transactions that focusing on the high -profile events (such as income announcement) may lead to sub -best repayments for retail investors. Although some well -positioned traders may profit from in -depth technology and basic analysis, others face losses, especially when their transaction decisions are mainly based on hope or hype.

A study in 2024 found that traders of traders about Robinhood were “mass groups and immediately lost interest on the same stock after the announcement.” The author concluded: “There are almost no evidence that they have made any profits that they have made a transaction that earns the announcement.”

Another study of the “grazing” among Robin traders. When the number of users with specific stocks increase significantly one day, this may occur around the income announcement. It discovered “a large number of negative rewards after the Roblin group.”

Bottom line

Although it seems attractive to buy stocks before income calls, it is usually a high -risk strategy that needs to be carefully considered. Most investors do not try to surprise time income. Instead, they will better serve through thorough research based on thorough research, company foundation and diversified long -term strategies.

For those who are interested in transactions around income, it is important to understand the company’s historical income model and be able to flexibly manage risks. Remember, even experienced investors have found that continuous profit from trading strategies related to title is a challenge.