This is how you know something is wrong with the markets in this country. Today, Exxon Mobil announced that their second quarter profit amounted to $11.68 billion, the largest quarterly profit ever recorded. However, the value of their stock went down because it didn’t meet analysts’ expectations.
So let me get this straight: most profitable company of all time = drop in total value of the company. Who are these f’ing analysts and why do their “expectations” get to determine so much? Especially when the outcomes completely defy common sense. Do they just sit in a room and arbitrarily get to decide what various companies have to earn to make them a solid investment for the public? And why do they get to determine how much profit is enough? Isn’t even a small profit a good thing?
My head hurts. I’m gonna go lay down now.
July 31, 2008 at 5:12 pm
Analysts’ expectations are reflected in the price of the stock when the expectation is made public. If they are not met, the value of the stock has to even itself out so it is going to go down.
Not meeting analysts’ expectations signifies that there may be problems within the structure of the business. This may in fact be true as Exxon is contemplating exiting the gas station business because of such poor profit margin.
July 31, 2008 at 8:00 pm
Am I related to a fucking textbook?
July 31, 2008 at 8:03 pm
But who are these “analysts” and why do they get to determine what makes a company successful? What makes them so special?
July 31, 2008 at 8:47 pm
Yes, you are. They’re not special at all. It’s just their job to predict how much a company should make just like it’s your job to write.
July 31, 2008 at 8:49 pm
But I don’t get to arbitrarily decide what it is I get to write? How does someone determine that the most profitable quarter in the history of the world isn’t profitable enough?
July 31, 2008 at 9:02 pm
Why do I get to determine how much a mutual fund costs? I just do. I guess considering gas prices hit record-highs they just expected Exxon to make more money than they did. The stock price all evens itself out though. It went up too much when the expectation first came out and now it is going down a little bit because that expectation was too high.