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I don't understand why this good news translates into the stock being down over 12% after hours.

tyingq 9y ago
Because AMD also said this: "For the fourth quarter of 2017, AMD expects revenue to decrease approximately 15 percent sequentially"
brokentone 9y ago
The market is all about growth -- they're projecting a pullback next quarter. It's also already priced in -- they're about 200% last year's price ($7.50). Investors already expected this news, they only beat estimates by a little.
partiallypro 9y ago
Markets overreact, especially when there are weak hands that were looking for an earnings pop. I wouldn't be surprised to see it only close down 6% tomorrow. IMO their guidance was playing it safe, and they will outperform it. They've done that the past few quarters. It's also a sequential decline, not YoY.
inetknght 9y ago
People in the stock market care more about short term gains than long term ones.
- freedomben 9y ago
  There are definitely some people that care about short term gains, but there are plenty that are in it for the long term. Virtually everybody with a 401k or mutual fund is in it for long term gains, and I would imagine the amount of people in that basket far exceeds the number of day traders.
JamesNK 9y ago
A stock price doesn't reflect how profitable you are today, it reflects how profitable you'll be tomorrow.
mtgx 9y ago
Short-term investors took the profits they made over the past few months and got out, not expecting even bigger grows over the next few months. But that could change in a few months' time, when AMD will prepare to launch Ryzen 2.
kobeya 9y ago
Buy on the rumor, sell on the news.
silotis 9y ago
The direction a stock moves after an earnings announcement has nothing to do with how good the earnings are in absolute terms. What matters is where they ended up relative to what the market was expecting. If AMD announced a 300% increase in earnings, but the market was expecting 400%, their stock is going to go down because 400% was already priced in. Similarly, a company's revenue can be down 300%, but if the market was expecting it to be down 400% the stock will rise.
- electic 9y ago
  In this particular case, it has nothing to do with the earnings of the previous quarter. The stock is down after hours due to guidance for the current quarter. Investors were not expecting a 15% drop in revenue in Q4. Personally, think most investors are over-reacting and this is a good thing to keep analyst expectations in check. They are really getting out of hand with some of their forecasts on quarter to quarter performance.
  - akvadrako 9y ago
    That's not it either. Q4 guidance has actually gone up over the previous estimates. Because their business is cyclical, it should be lower than Q3.
    - electic 9y ago
      I agree. The new guidance is still higher than the last Q4, however, it is still lower than what was forecasted.
- FridgeSeal 9y ago
  In other words: your share price is a function of the emotions of fickle investors and their expectations (regardless of plausibility) rather than how well your company actually did.
  - barrkel 9y ago
    Share price is an estimation of future performance, not past or current performance. Specifically it's supposedly the net present value of all future cash flows, discounted appropriately.
justinjlynn 9y ago
The market can remain irrational for much longer than any one individual can remain solvent.
ww520 9y ago
Stock price is all about expected future earning.

Because AMD also said this: "For the fourth quarter of 2017, AMD expects revenue to decrease approximately 15 percent sequentially"

brokentone 9y ago

The market is all about growth -- they're projecting a pullback next quarter. It's also already priced in -- they're about 200% last year's price ($7.50). Investors already expected this news, they only beat estimates by a little.

partiallypro 9y ago

Markets overreact, especially when there are weak hands that were looking for an earnings pop. I wouldn't be surprised to see it only close down 6% tomorrow. IMO their guidance was playing it safe, and they will outperform it. They've done that the past few quarters. It's also a sequential decline, not YoY.

inetknght 9y ago

People in the stock market care more about short term gains than long term ones.

freedomben 9y ago
There are definitely some people that care about short term gains, but there are plenty that are in it for the long term. Virtually everybody with a 401k or mutual fund is in it for long term gains, and I would imagine the amount of people in that basket far exceeds the number of day traders.

JamesNK 9y ago

A stock price doesn't reflect how profitable you are today, it reflects how profitable you'll be tomorrow.

mtgx 9y ago

Short-term investors took the profits they made over the past few months and got out, not expecting even bigger grows over the next few months. But that could change in a few months' time, when AMD will prepare to launch Ryzen 2.

kobeya 9y ago

Buy on the rumor, sell on the news.

silotis 9y ago

The direction a stock moves after an earnings announcement has nothing to do with how good the earnings are in absolute terms. What matters is where they ended up relative to what the market was expecting. If AMD announced a 300% increase in earnings, but the market was expecting 400%, their stock is going to go down because 400% was already priced in. Similarly, a company's revenue can be down 300%, but if the market was expecting it to be down 400% the stock will rise.

electic 9y ago
In this particular case, it has nothing to do with the earnings of the previous quarter. The stock is down after hours due to guidance for the current quarter. Investors were not expecting a 15% drop in revenue in Q4. Personally, think most investors are over-reacting and this is a good thing to keep analyst expectations in check. They are really getting out of hand with some of their forecasts on quarter to quarter performance.
- akvadrako 9y ago
  That's not it either. Q4 guidance has actually gone up over the previous estimates. Because their business is cyclical, it should be lower than Q3.
  - electic 9y ago
    I agree. The new guidance is still higher than the last Q4, however, it is still lower than what was forecasted.
FridgeSeal 9y ago
In other words: your share price is a function of the emotions of fickle investors and their expectations (regardless of plausibility) rather than how well your company actually did.
- barrkel 9y ago
  Share price is an estimation of future performance, not past or current performance. Specifically it's supposedly the net present value of all future cash flows, discounted appropriately.

justinjlynn 9y ago

The market can remain irrational for much longer than any one individual can remain solvent.

ww520 9y ago

Stock price is all about expected future earning.