The direction a stock moves after an earnings announcement has nothing to do with how good the earnings are in absolute terms. What matters is where they ended up relative to what the market was expecting. If AMD announced a 300% increase in earnings, but the market was expecting 400%, their stock is going to go down because 400% was already priced in. Similarly, a company's revenue can be down 300%, but if the market was expecting it to be down 400% the stock will rise.
In this particular case, it has nothing to do with the earnings of the previous quarter. The stock is down after hours due to guidance for the current quarter. Investors were not expecting a 15% drop in revenue in Q4.
Personally, think most investors are over-reacting and this is a good thing to keep analyst expectations in check. They are really getting out of hand with some of their forecasts on quarter to quarter performance.
In other words: your share price is a function of the emotions of fickle investors and their expectations (regardless of plausibility) rather than how well your company actually did.
Share price is an estimation of future performance, not past or current performance. Specifically it's supposedly the net present value of all future cash flows, discounted appropriately.
The proportion of "investors"? Low. The proportion of market capital allocation, among people doing active allocation for long-term buy and hold strategies? Very high.
No. The change in your share price is a function of the change in how well your company is expected to do. The absolute value still corresponds to how well you're doing/expected to do.
Well, yes, but that's not the point being made: the stock market aggressively prices in expectations ahead of time to avoid losing money. The reason the stock goes down is because the gain is already priced in!
That applies to pretty much all domains. From choosing an employer, restaurant, movie, car to choosing an editor, programming language, keyboard, etc. Humans, some more so than others, trick themselves into thinking they are rational, or that their decisions are firmly grounded.
