InsiderFlow › Glossary › What is guidance?
Guidance is the company's own forecast of its future results: it often moves the stock more than the results just published.
At every earnings report, management indicates what it expects for the coming quarters: revenue, margins, profits. The market prices the future, not the past: a record quarter with disappointing guidance sinks the stock, and vice versa.
Companies tend to guide conservatively so they can beat ("beat and raise"): a guidance hike is one of the most bullish signals there is.
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It's the most informed estimate available, but still a forecast: management can be wrong or deliberately conservative.
The stock usually drops sharply: the market reprices on lower expectations.