What is Earnings Season?

HELLO 👋🏼🌊 to our lovely Monarch readers📔 

Bailey here, writing to you with a hot cup of coffee ☕, a sleepy Oliver David 👶🏼 🐈, and a Snuggie 👻

Today, we’re going to chat about seasons.. but not your typical time of rain, shine, or snow. This one is full of numbers, graphs, and sometimes, nail-biting suspense!!!

snap snap HEY snap snap STAY WITH ME HERE - This isn’t the math class from high school that still appears in your nightmares, this relates to MONEY MATH BABY

Much like eagerly awaiting the season premiere of your favorite show, investors around the globe anticipate what they call ✨Earnings Season✨

Below is your VIP pass to a 101-level understanding this blockbuster event 🎟️

So grab your popcorn 🍿 because Earnings Season 101 (and the actual Q3 earnings season 👀 is here!)

Today’s Monarch Menu

• 🎥 Scene 1: What & When is earnings season

• 🎬 Scene 2: Why does earnings season matter?

• 🔍 Scene 3: What to look for in a company's earnings report

• 🎤 Scene 4: Why the numbers matter

🎥 Scene 1: What's the Buzz About?

Imagine if companies had quarterly report cards, just like we did in school. Well.. that pretty much sums up earnings season! It's when publicly traded companies strut their stuff💃🏼, unveiling their financial report cards in a glamorous document known as Form 10-Q.

The spotlight doesn't end there. Many times, CEOs will hop onto conference calls (where all investors are welcome) to give what can be hilariously compared to celebrities giving post-movie interviews. The CEOs explain their companies results over the past quarter, field questions from the ever-curious Wall Street analysts, and chatter about what they predict the next quarter & continued future will hold.

Wait - when exactly does this happen? It mainly falls in the month following the end of each calendar quarter – which are March, June, September, and December:

Note: Some companies stick to a different fiscal calendar, and therefore report their financial results at other times. For example, many retailer companies have fiscal quarters that are one month later—the quarter ends on Jan. 31st rather than Dec. 31st.

🎬 Scene 2: Why The Hype?

For the active* investors, it's a binge-watching marathon! This season can either be the anticipated answer to the latest cliffhanger, or their dreaded plot-twist. Earnings reports provide a sneak peek into a company's past & present, and hint at the future. Companies don't just recount tales of quarters past; they often spill beans about upcoming plans & new, innovative strategies, making these events (sometimes) juicier than the latest TV drama.

*active investors = investors who buy & sell frequently, so ongoing short term trading rather than the buy and hold approach.

Need a great example of a fun, earnings szn flare for the dramatics? Our favorite device daddy (Apple🍎)

Apple’s last earnings report was pretty ordinary (for them lmao). They posted quarterly revenue of $94.8 billion, which is down 3 percent year over year.

Though you’d be hard pressed to find an investor who isn’t still excited about their future after hearing homeboi Tim Cook’s (CEO) thoughts:

(BTW - TIM COOK? AN ICONIC GENIUS GAY, LOOK)

🔍 Scene 3: Hunting for Easter Eggs

If you've ever searched for hidden clues in movies, that's precisely what many investors do with earnings reports 🔍. Buried within these pages are clues about a company's health and trajectory 📈

And guess what? Anyone can play detective here! You won’t have to pull a Nicholas Cage to steal the The 10-Q Form every quarter - it’s intentionally public and easy to access! It’s typically published on the company's website directly after its release and/or can always be found in the intriguingly named EDGAR database by the SEC.

The numbers the 10-Q delivers serve as indicators of a company's growth trajectory and overall health, two borad factors that really influence the 🆙 and ⤵️ of a stonk.

🎤 Scene 4: And the Results Are...

(ie: why you should care)

I can’t emphasize enough that earnings reports are, in essence, are fun little corporate report cards. They pull back the curtain on a company's financial health, revealing successes, exposing vulnerabilities, and projecting future paths. For investors, these reports are the compass by which they navigate the tumultuous waters of the stock market.

With its barrage of data, guidance, and projections, becomes the bedrock on which investment strategies are built or rebuilt. As the final financial results are compared with analyst predictions, companies will either bask in the glow of exceeded expectations OR grapple with the ramifications of missed targets 🎯

The industry-wide results are meaningful, too - positive results can send ripples of optimism, driving bullish trends, while disappointments can plant seeds of caution. The earnings season isn’t just a routine corporate exercise, but a pivotal period that holds the power to influence individual portfolios and the stock market's broader trajectory.

Now watch me tie this back to the big screen to stay in theme for the wrap up 😋💃🏼👻😏🤑:

Earnings Season is like the climax every great movie needs - As companies reveal their results, the market holds its breath. Did they conquer the financial dragons, or face setbacks in their corporate quests? Was this a Shrek-winning-his-swamp-back effort, or did the lady dragon just burn up the bridge to freedom?

This was fun!

Stay amazing everyone (and Madelyn I love you!!!!),

Bailey

Sources

• Investopedia: When Is Earnings Season

• Forbes: What is earnings season and why is it important?

• Moneywise: What is earnings and how does it affect the market?

• SEC: EDGAR Search and Access

• Apple Newsroom: Apple Second Quarter Results

• FinMasters: What is the 10-Q Form?