Guidance

Companies are not obliged to give it and not all of them do. Those that do usually publish a range rather than a single figure: revenue of $4.2 to $4.4 billion for the next quarter, or an annual number updated as the year goes on. It is the company forecasting itself, out loud.

It explains a reaction that otherwise looks irrational. A company can report a quarter that came in above every published estimate and watch its share price fall the same afternoon, because the guidance issued in the same release described the quarters ahead as weaker than analysts had assumed. The past was already priced in; the new information was about the future.

Guidance is a forecast made by people with an interest in how it lands, and companies revise it as the year goes on. Withdrawing it entirely, which happened across the market in early 2020, is itself a statement: it says management does not consider the next few quarters forecastable at all.