Why Stock Price Falls After Good Quarterly Results?

I've always wondered - why does the price of some stocks fall after the company has posted excellent quarterly results? I mean, the news headline would say something like 50% growth in profits and when one looks at the stock price, it would be down by 3-4%. In this short video, I give you four reasons why share prices fall even after the company posts improved financial results. These are:
1. Quarterly results did not meet market expectations
2. Managements guidance for the next quarter or next few quarters was weak
3. Profit booking happened and traders who bought in anticipation of a pice hike (which happened in the run-up to the results) sold their shares
4. Irregularities in the financials e.g. the company's debt might have gone up or it might have done some unnecessary acquisition (like when Infosys acquired Panaya or Aurobindo Pharma announced its intention of acquiring Cronus Pharma Specialities India etc)

Other than these, there can be a few more reasons like some major shareholder parring down some of his/her stake in the company or a research analyst/brokerage giving a negative report for the company etc.

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Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented

[murthy]

Shankar, you're one of the finest, honest, knowledgeable, research based, well articulated, no nonsense finance youtuber. You may not be as popular as some of the current "Top Finfluencers of India", but you're more trustworthy and informative than any or all of them. Keep up the good work.

[benusinghal]

5. Rare, but it can also happen due to insider trading. When an investor has an indication of weak performance going forward.

[Thinkthetrad]

Liquidity hunting... Is biggest reason

[atulmittal]

SBI on 18th May 2023 falling over 2% despite stunning results. Not sure if it exactly fits any of the 4 reasons mentioned in the video

[manojkumar-kzvu]

Lower OPM also can result in fall price of chip

[mailviveks]

Major root causes are profit booking, lack of patience and fickle mind. Long term investors do not care about good companies. This I have experienced when I bought Tata Global Beverages at Rs 140 and sold at Rs 800 after 7 years.

[anujoybardhan]

Price action preceding future expectations or not meeting past expectations of earnings ...

[johnmascarenhas]

First three reasons were the cause for infosys falling to 1220 after the Q4 FY23 results were declared

[thejasvivondivillu]

Thank you sir. How about if the good results are already accounted in the price?

[shaikalisha]

sir please explain clearly, with example companies related with good acquisitions and bad acquisitions

[lakshmi-dt]

How is 4th point good quarterly result?

[Hariharan]

One more to list I think is, less sales revenue.

[derekdsouza]

Despite the rule od being transparent in declaring results, im sure there is some figures not.properly declared.
If a company does well always, they woundnt need investors, and would eventually.delist. this is just one the reason.
Its all a gamble

[mansionoflostspiritsrecords]

Imma be completely honest, I don't even know what you're talking about