Groupon Inc. (NASDAQ:GRPN) is expected to report earnings on Wednesday, May 8th. The whisper number is $0.03, in-line with the analysts' estimate. GRPN has a 33% positive surprise history (having topped the whisper in 1 of the 3 earnings reports for which we have data).
- Beat whisper: 1 qtrs
- Met whisper: 0 qtrs
- Missed whisper: 2 qtrs
Our primary focus is on post earnings price movement. Knowing how likely a stock's price will move following an earnings report can help you determine the best action to take (long or short). In other words, we look at what happens when the company beats or misses the whisper number expectation.
The table below indicates the average post earnings price movement within a one and thirty trading day time frame:
The strongest price movement of -24.7% comes within ten trading days when the company reports earnings that beat the whisper number, and +47.3% within thirty trading days when the company reports earnings that miss the whisper number. The overall average price movement is opposite through thirty trading days when the company reports earnings.
The table below indicates the most recent earnings reports and short-term price reaction:
Last quarter the company reported earnings twelve cents short of the whisper number. Following that report the stock realized a 28.9% loss in after hours trading, but gained it all back by seeing a 35.4% gain in twenty trading days. Overall historical data indicates the company to be (on average) an opposite price reactor (beat the whisper number and see weakness, miss and see strength (based on very limited data)) through thirty trading days when the company reports earnings.
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Since 1998, WhisperNumber.com has been tracking and publishing "crowd sourced estimates" for earnings. We call these earnings expectations whisper numbers. Our whisper numbers are gained from individual investors and traders just like you that have registered with our site. While the whisper number itself is an important part of our analysis, a company's "price reaction" to beating or missing the whisper number expectation is the key. On average, companies that exceed the whisper are "rewarded," while companies that miss are "punished" following an earnings report. Trading on whispers is a technical play on market psychology, rather than a bet on a company's fundamental strengths.