Reported results below consensus estimates; rarer than a beat and usually punished harder, because it breaks the assumption that management controls the outcome.
A miss signals either a genuine demand problem or a loss of forecasting control, and markets dislike both. The asymmetry is well documented: the average fall on a miss exceeds the average rise on a comparable beat.
Where the miss occurs matters. A revenue miss with margins intact suggests demand; a margin miss with revenue intact suggests cost or pricing; a miss below the line is often a one-off worth ignoring.
Example: Northwind Tools reports revenue of $196M against $204M consensus while holding gross-margin flat. The shares fall 11%, and consensus for the following year drops 6% within a week.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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