On July 30, 2025 after US trading hours Qualcomm (QCOM) was scheduled to release earnings report. It's analysed investors expectations using output of Open Query system by ADALYTICA. It measures mainstream and social media into sentiment score and trend indicators, enabling users to query for real-time data.
In the days leading up to Qualcomm’s earnings, sentiment indicators pointed to extremely high expectations from investors. ADALYTICA's Open Query system shown that the sentiment reached 0.615, significantly above the moving average of 0.404. The green line in the chart indicates heightened optimism, with sentiment peaking near 0.98 just before earnings. However, despite exceeding expectations, Qualcomm’s stock saw a significant sell-off post-earnings, as highlighted by the subsequent sharp decline in sentiment.
This behavior is a classic case of profit-taking. Qualcomm’s pre-earnings rally had already priced in a lot of positive sentiment, leading investors to lock in gains once the results were released. While the company’s earnings were strong, this ‘buy the rumor, sell the news’ dynamic shows that market sentiment can sometimes be disconnected from the actual performance.
The chart also reveals an interesting pattern. Prior to the earnings call, sentiment was extraordinarily high, reflecting investor optimism. However, once earnings were out and expectations were met, investors likely chose to cash out, creating a significant pullback. This pattern is not unique to Qualcomm, similar movements have been observed with companies like Stryker and Nextera Energy, where strong earnings didn’t prevent post-earnings sell-offs.
This pattern suggests that a more nuanced understanding of investor sentiment, beyond just the earnings reports themselves, could be key to predicting stock movements. With the rise of speculative behavior, an investor sentiment index that takes into account market psychology and profit-taking tendencies could help investors better navigate these unpredictable reactions. It is also similar to more simple but popular indicators such as Fear & Greed Indexes, but in this case Open Query is a system that allows to see a very specific market expectation to a narrow asset, such as equities of an individual company prior to a very critical event for price volatility.
