Earnings calls thus far have struck a similar tone
- XYZ CEO: “Let me begin by saying our thoughts are with…”
- XYZ CEO: “We are grateful for the opportunity to delight our customers during this difficult time. We got off to a good start in the months of January and February as we experienced healthy year-over-year growth. However, activity slowed during the month of March due to the Coronavirus. Despite this period of uncertainty, our long-term outlook remains intact. We have little near-term visibility and therefore will not provide Q2 guidance nor full year guidance on this call. We look forward to updating investors as we gain visibility.”
- Stock goes up the next day.
This fever dream can’t last. The market will eventually hold investors and companies accountable. Investors should expect wide variability in revenue and earnings estimates given the lack of revenue and earnings guidance. Therefore, the probability of a market dislocation during the June quarter reports increases. Our advice to companies – if you have visibility into the second quarter provide a revenue and profitability range. Heck, it’s late April, draw a trend line off of April and haircut it by 10-20% and put numbers out there. Tell investors you are taking a conservative approach to your Q2 outlook. It is better than telling investors you have zero visibility and are unable to take an educated guess. It is not supposed to be easy for CEOs. You don’t get to take your ball and go home.