According to investment company Jefferies, investors began to sell shares of companies more aggressively, who reported worse than experts' expectations. Seems, high stock market valuation leaves no room for error.
The Jefferies counted: shares of large companies, whose revenue or profit was below the estimates, fall on average 7% within five days after the report. For comparison: before, stocks lost only after weak reports 3,7%.
A good example is Disney stock.. Papers fell on 7% after the publication of results for the third quarter - the worst session for Disney shares since last June. The number of new subscribers on Disney + was much lower than experts' estimates: 2 against 9 million people. But the revenue lagged behind expectations not so much: 18,53 against $ 18.79 billion.
Similar situation with PayPal. Here, after the report, the shares fell by 11%. The last time the company's stocks fell this much was in March 2020., when the "coronavirus" market crash happened. All because, that 2022 revenue guidance was slightly below analyst consensus: 30 billion versus $ 31.6 billion.
Stock market rose to record levels as, how the economy was recovering after the lockdown. So, since the beginning of the year index S&The P 500 rose by 26% And 64 times updated the historical maximum. And this led to a high market valuation. For example, CAPE score, or Shiller P / E, rose to 39 - the highest 20 years of value. CAPE - capitalization ratio S&P 500 to the average for the last 10 years of earnings adjusted for inflation.
See also, Jefferies notes, Not only did investors sell stocks harder after bad reports, but also less to buy after good. Company papers, which reported better than expected, are now growing on average 3,2% within five days after the report, although they used to add 4,6%.
