Yahoo Set In Earnings-Driven Pattern That Favors Shorts

| About: Yahoo! Inc. (YHOO)

Yahoo (NASDAQ:YHOO) is one for shorts to watch tonight as its post-earnings downside follow-through is the more established pattern in our database.

YHOO favors a widening pattern over the past year, extending its post-earnings share move in the next day's regular session in the latest seven quarters. The longer-term trend now just favors widening, with 14 narrowing moves between the sessions and 16 wider next-day moves after evening earnings releases.

Looking deeper into YHOO's performance data, the stock has seen an after-hours decline in 13 of the 30 earnings-driven after hours moves we've tracked, and nine times, or 69% of the time, followed that trade with a more-aggressive decline in the next day's regular session.

On the plus side, longs should be a bit more wary of the sustainability of evening upside moves. YHOO has recorded an earnings-driven evening gain in 17 of the 30 quarters we've tracked. It has reversed or narrowed that gain in next-day regular session nine times, about 53% of the time.

Yahoo is due with its Q4 results after the bell tonight, and analysts polled by Thomson Reuters are expecting the company to report a profit of $0.24 per share on revenue of $1.19 billion.

Here's the historical performance data:

  • On Oct. 18, 2011, the stock gained 2.5% after a Q3 beat and revenue guidance that straddled the Street view. Shares rose 3% the next day.
  • On July 19, 2011, YHOO declined 1.4% in evening trading after meeting Q2 EPS estimates, coming in shy on revenue and setting its forward revenue view mostly below estimates. The stock fell further the next day, ending the July 20 regular session down 7.6%.
  • On April 19, 2011, the stock gained 2.6% after a narrow Q1 beat and Q2 guidance that straddled the Street view. Shares rose 4.6% the next day.
  • On Jan. 25, 2011, the stock fell 1.5% after mixed earnings and revenue guidance below the Street view. Shares dropped 2.8% the next day.
  • On Oct. 19, 2010, the stock edged up 0.9% in after-hours trading as Q3 results did top the year-ago quarter. Shares rose a stronger 2% the next day.
  • On July 20, 2010, YHOO dropped 6.5% in evening trading after beating Q2 EPS estimates by a penny. The stock added to its downside the next day, closing the July 21 regular session off 8.5%.
  • On April 20, 2010, YHOO declined 3.9% in after-hours trading after beating earnings expectations but reporting revenue that was just shy of estimates. The stock headed deeper in the red the next day, closing the April 21 regular session down 5%.
  • On Jan. 26, 2010, YHOO firmed 2.7% in the evening session after reporting improved year-over-year Q4 results. The stock lost its upside the following day, ending the Jan. 27 regular session down 0.06%.
  • On Oct. 20, 2009, the stock gained 5.4% in after-hours trading when YHOO beat with earnings though showed a decline in revenue vs the year-ago quarter. The share gain was trimmed to 2.8% the following day.
  • On July 21, 2009, the stock fell 2.8% during after-hours trading after a Q2 beat. Shares rebounded to gain 3.7% the next day.
  • On April 21, 2009, YHOO advanced 5.7% in after-hours trading after reporting results in line to above Street estimates. It lost the bulk of that gain the next day, ending up a mere 0.7%.
  • On Jan. 27, the stock gained 4.5% after reporting a Q4 beat. Shares expanded that gain to 7.9% the next day.
  • On Oct. 21, 2008, shares rose 7.7% after an earnings meet. The gain was trimmed to 2.6% by the close of trading the next day.
  • On July 22, 2008, the stock gained 2% during extended-hours trading despite a Q2 earnings miss. Shares reversed to end down 4.7% the next day, however.
  • On April 22, 2008, YHOO slipped 0.8% in after-hours trading after posting Q1 results ahead of expectations. It saw continued selling the next day, closing the April 23 regular session off 1.6%.
  • On Jan. 29, 2008, YHOO cratered 10.2% in evening action after meeting on Q4 revenue, beating on earnings, and setting mixed guidance. It saw that downside narrow slightly the following day, ending the Jan. 30 regular session down 8.4%.
  • On Oct. 16, 2007, YHOO charged 8.9% higher in night trading after topping Q3 estimates. It pared that gain slightly the following day, ending the Oct. 17 regular session up 7.9%.
  • On July 17, 2007, YHOO shed 4.1% in the evening hours after reporting revenue and guidance in line. The loss was a slightly deeper 4.8% the next day.
  • On April 17, 2007, YHOO dropped 8.1% in night trading on weaker-than-expected Q1 sales, ex-TAC. It tumbled further the following day, closing the regular session down 11.7%.
  • On Jan. 23, 2007, the stock was up 5.9% in the after-hours session after the company reported ahead of the Street with Q4 results but guided mostly lower with its revenue projections. The stock was up 7.3% the next day.
  • On Oct. 17, 2006, the stock was up 4.3% after meeting with EPS, but it missed with revenues and guided lower for upcoming revs. The stock fell 4.8% the next day.
  • On July 18, 2006, shares tumbled 13.7% in the evening hours after YHOO reported revenues below Street and EPS in line. It guided in a range that straddles the Street view. The loss swelled to 21.8% the next day.
  • On April 18, 2006, YHOO surged 6% in evening trading after the company beat Q1 expectations and guided mostly in line for its Q2 and full year outlook. The stock added to its upside in the April 19 regular session, ending the day up 7.1%.
  • On Jan. 17, 2006, YHOO fell 12.9% in evening trading after reporting results a penny shy of the FC mean and issuing disappointing guidance. The loss narrowed only slightly the next day, to 12.2%.
  • On Oct. 18, 2005, YHOO advanced 0.4% in evening trading after the company beat Q3 estimates and guided its Q4 and full year revenue outlook in-line to higher than the then-current estimates. The stock recorded a firmer upside in the Oct. 19 regular session, jumping 6.5% between the bells.
  • On July 19, 2005, YHOO tumbled 9.9% after missing on revenue, posting in-line EPS and posting a sales outlook that could miss the low end of the Street forecast range. YHOO widened its downside in the July 20 regular session, plunging 11.4%.
  • YHOO shares gained 5% in after-hours trading on April 19, 2005, after the company blew past expectations and guided ahead of Street estimates. Its upside slimmed down a bit on April 20 as the issue closed that day's regular session with a more modest 4.3% advance.
  • YHOO climbed 1.7% the night of Jan. 18, 2005, after the company topped Q4 expectations and guided its forward outlook in line with current Street estimates. The upside failed to hold in next-day trade, and YHOO closed the Jan. 19 regular session down 1.9%.
  • YHOO added 2.1% the night of Oct. 12, 2004, after the company topped expectations and guided its Q4 outlook around the Street view. It closed the Oct. 13 regular session up the same 2.1%.
  • YHOO plummeted 11.8% in the July 7, 2004, after-hours session after the company missed revenue expectations and set a guidance range that, at the low end, could miss the Street view. The stock saw its downside narrow the next day, ending the July 8 bell-to-bell session down 7.7%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.