Earnings Gaps

Why earnings reports cause the biggest gaps, with real 2025 examples from Amazon and Meta, and how traders decide whether to act on them.

The biggest scheduled gap risk

Most companies report earnings four times a year, usually before the market opens or after it closes. The results and, even more, the guidance for coming quarters can change what investors think a business is worth overnight. That is why the largest gaps in most stocks happen the morning after earnings.

The size of the gap depends on the surprise, not on whether results were “good.” A company can beat estimates and still gap down if guidance disappoints or investors expected even more. We cover this in the Earnings Season Playbook.

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