Earnings Release Date: 08/07/2013
Avg. Extended-Hours Dollar Volume: $6,913,426
Earnings Sensitivity (up or down): 13.1%
Rosetta Stone, Inc. ( RST ) is due to issue its quarterly earnings report after the close today. Given its history, traders can expect very active trading in the upcoming After-hours session immediately following the company's release of its quarterly earnings. An analysis of historical premarket and after-hours trading activity and liquidity conditions in RST following an earnings release indicates that the price change in the extended hours is likely to be of moderate value in forecasting additional price movement in the following regular session.
Analysts at MidnightTrader have tracked how RST's stock price has reacted to quarterly earnings events the past both in the after-hours and following regular session. The result of that study is below.
Over the last year, when shares of RST rose in the extended-hours in reaction to its earnings announcement, there is limited evidence to suggest a follow-through in the same direction the next day.
Over that same historical period, when shares of RST dropped in the extended-hours in reaction to its earnings announcement, history shows that 25% of the time over the last 4 quarters the stock dropped further, adding to the extended-hours losses by an average of 8.60% by the following regular session close.
Our analysis of over a decade of company specific earnings related news and price data on over 5,000 US companies demonstrates that earnings event related trading opportunities can exist for those trading in the after-hours and premarket sessions. Certain stocks demonstrate a historical tendency to either underprice or overreact to earnings news in the extended-hours (the time when companies typically release earnings) relative to the following regular session close.
This report was created using historical data and analysis provided by the Midnight Trader Pro service at MidnightTrader.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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