This page shows you how much a company’s stock price moved in the past when it released earnings. First, you can see if a company’s stock price will immediately move up or down after earning are released. This is referred to as gap up or down and is tracked by percentage.
Then, you can view the average stock price gap up/down (the stock price move immediately after earnings), average stock price close for the prior earnings days, and average stock price high/low for the prior earnings days. After that, you can view the same data, but instead of the averages, it’s the strongest movement, either the highest or the lowest.
Finally, the average volume is included because trading volume ensures that the stock will be priced more accurately after earnings are released. The higher the volume, the more people are participating in deciding the stock price, improving the accuracy. You can also see the average on how much the stock price moves up and down 10 days and 90 days after they release earnings.
Certain companies’ stock prices can move significantly within seconds after earnings are released. With this data, you can predict to a certain extent how much a company’s stock price will rise or fall after they release future earnings.
For example, when Tesla’s stock rises 14% after beating earnings, the price increase may seem random to other investors. However, Fincuity members can clearly see that Tesla’s stock price has shown to increase by approximately 12% whenever they released favorable earnings in the past, and thus are not surprised by the new price movement.
Think of the average rise in favorable earnings as the potential profit and the decline in unfavorable earnings as the potential risk. It would be ideal to invest in a stock that has an average rise of 20%, and an average decline of 5% because the potential profit greatly outweighs the risk. It’s also important to note that the Fincuity Four are meant to be used with one another.
Here is an example of a perfect company. The company releases favorable earnings 90% of the time and unfavorable earnings 10% of the time (known from the Earnings page). When the company releases favorable earnings, their stock price closes 20% higher on average. On the other hand, when they release unfavorable earnings, their stock price closes 5% lower on average. This means that you have a 90% chance of making 20% in profit when the company releases earnings, with only a 10% chance of losing 5% of your investment.